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Nationwide rebuffs broker churning claims

Nationwide Building Society says comments printed in the Sunday Telegraph yesterday which accused brokers of churning fixed rate mortgages in order to get a fee were taken out of context.

In an interview with the Sunday Telegraph, Chris Rhodes, product and marketing director at Nationwide, claimed some brokers were pushing for borrowers to fix not because of rising interest rates but because of the fee they receive.

When asked why so many brokers were urging borrowers to fix, he is quoted as saying: “Churning mortgages gets them [brokers] a fee.”

But a spokesman for Nationwide says the comments were taken out of context and this is not its view of the broker market.

He says: “We were not saying that borrowers should ignore calls from brokers to fix now, but we believe while it is right for some to fix now it is not right for others.”

He is concerned that the comments give the wrong impression of its view of the broker market.

The article goes on to quote Rhodes as saying: “If you are on a standard variable rate of 2.5% and you are offered a two-year fix at 4.5pc, you have to be comfortable paying that extra 2% points as insurance.

“You may feel that you can afford to take the hit if rates rise – even if they rise by as much as 1.5 points, for instance.”

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  • colin 24th February 2011 at 4:22 pm

    anonymous 11.01am

    you worked in a call centre for a sub prime lender ??……all the mainstream procs are pretty much the same for all lenders. Those brokers have long gone my friend with self cert & sub prime!!!!!!!

  • Alan 24th February 2011 at 11:01 am

    It would be interesting to see a study whereby the proc fee was not dislosed until the the case completed to the broker, so he wouldnt no how much he was being paid (I know in reality it will never happen) but it would be intriguing comparison. I previously worked in a mortgage call centre, and a frequently asked question was ‘which has the higher proc fee’

  • colin 23rd February 2011 at 3:23 pm

    Sarah, thats not really the issue. be it a bank or building society one of its big wigs has basically accused the broker arena of churning for churnings sake to earn a fee/proc fee or both. Conveniently forgetting that for the last 2 years, many brokers wold have been advising their clients to remain on SVR’s like N/Wides at 2.5%. Its also quite pertinent that I have seen many of my clients over the last two years who have been pestered by phone & letter when their deal has ended with the lender trying all they can to get clients onto another product and NOT the SVR!!!!!!!!!…and of course these products had fees. you seem to conveniently forget about Mr Rhodes!!!!!

  • Sarah Smith 23rd February 2011 at 1:42 pm

    guys, Nationwide are a building society not a bank, there is quite a big difference!

  • David Stirling 22nd February 2011 at 1:32 pm

    I recently attended a Round Table event where a Snr Nationwide ‘Spokesman’ presented a Market Review. He said that the Nationwide view was that Base Rate would rise around Aug 2011 and could be at 5% by 2015. They put out such forecasts then also within days when Lenders start to put up rates good Brokers will re-act quickly for their clients. Shocking that they are then accused of chasing proc fees by the same people causing the ripple! Further exposed by 0.3% increase today, Brokers were right to get in early.

  • Tom Cleary 22nd February 2011 at 11:27 am

    Maybe Chris Rhodes will offer his resignation for damaging so much of the good work Nationwide have done with Intermediaries in the last two years. He is the Product & Marketing Director for a Lender that is clearly comitted to our channel and as such should fall on his own sword. But will he? Will he heck!

  • Tim Robinson 22nd February 2011 at 10:52 am

    Nice one William Kingsley totally agree.

    As a previous winner of a Nationwide outstanding contribution award I have to say Rhodes be ashamed be very ashamed!!!!

  • Simon Collins 22nd February 2011 at 9:30 am

    As they’ve put their rates up but over 60bps in the past week, thereby increasing further the margin between fixed and variable, are they genuinely surprised that variable rates remain popular? They don’t seem to realise that most brokers moved away from the outdated two year market sometime ago, especially as lenders know have their highly uncompetitive SVR’s waiting at the end.

    Most quality brokers are looking at the better long term fixes (not Nationwides offerings) or Term Trackers with Droplocks.

    It’s another case of a big lender being totally out of touch with the market they work in ! Must be why we are dealing more and more with smaller lenders who actually understand the combined concept of service, underwiting and product.

  • Aaron Griggs 22nd February 2011 at 9:06 am

    Totally agree with William, Not all brokers are out for a quick buck and offer true advice that will be of benefit to the client. I really cant see how Mr Rhodes comments can be taken any other way !!

  • colin chapman 22nd February 2011 at 8:59 am

    re William Kingsley….exactly my philosphy too. had similar client appointment today, someone on C&G SVR at 2.5% insisting they wanted a fixed rate. Their LTV was 85%. very appreciative that I took the time to explain why i didn t think this was the right option and to stay on that SVR. This cost them nothing, cost me an hour or so of my time and made zero in cash terms but they will come back to me and recommend me to anyone who mentions needing a mortgage.

  • Andy Valvona 22nd February 2011 at 8:58 am

    I couldn’t agree with William Kingsley more. Sellers at Banks are on a knifeedge the whole time – it really is a case of hit your target or else. The “or else” is a Performance Improvement Plan, which often leads to the Bank employee, who is probably on less than £20k pa, losing their job.

    This is why Banks are so aggressive, and often a) either sell the wrong product, or b) Get a case through by manipulating, or “engineering” cases.

  • Roger Pettit 21st February 2011 at 8:06 pm

    I can only echo the words of William Kingsley…..It all about building long term relationships with clients and not hit and run merchant

  • Gary 21st February 2011 at 6:20 pm

    I think these lender spokesmen let these slip pf the tongue comments out so they can say just enough to plant the seed in the publics minds so that they doubt the trustworthyness of brokers. They know the public do not read the full story and just remember the headline. Planned I think

  • aa 21st February 2011 at 5:55 pm

    Its really frustrating to hear a spokesperson apologing. Nationwide may as well stick with the original comments.

    They must think were all stupid and unaware of viral adverstising. This type of advertising is planned and co-ordinated from the start; the article eventually made yahoo headlines. The damage is done..

    In this climate, wild accusations make headlines and thats exactly what Chris Rhodes as done; given he is Marketing Director.

    Overall, the marketing stategy was good and well coordinated. Its a pity he’s targeted brokers because in times like this, many brokers give good advice day in day out; just like the example he illustrated.

  • William Kingsley 21st February 2011 at 4:50 pm

    There are very many good brokers out there who give good advice to people and it is not ‘one size fits all’ like you get in a bank like nationwide. I really don’t think banks can preach to IFAs given their track record in customer service. I have seen some clients this morning and advised them to stay on their very low lifetime tracker I arranged nearly 3 yrs ago. I don’t get paid for that hour but it will be worth more in the goodwill when I get 4 or 5 referrals coming to me because they know that I have their best interests at the forefront of my mind. If I was at a bank I would have had a b*llocking from my sales manager for not selling to them….that’s why people deal with IFAs.

  • John Pinkman 21st February 2011 at 4:11 pm

    a case of foot in mouth methinks..can he explain what he actually meant ? I look forward to a cover up of sorts ..

  • Bob Riach 21st February 2011 at 4:09 pm

    From Tuesday 22 February 2011, they are increasing interest rates across all fixed rate products by 0.30%. what’s he going to day about that

  • Bob Riach 21st February 2011 at 3:48 pm

    Is he authorised to offer this advice to the general public

  • Ian Griffiths 21st February 2011 at 3:43 pm

    He’s been caught trying to undermine the Brokers and should be put out to grass. If Nationwide truly do believe that the Brokers have a value, then this guy is well out of line.

    Sack him!

  • Avenue & Co Private Finance 21st February 2011 at 3:23 pm

    1. Its in the lenders interest to push people on the awful high margin trackers now – most at 2.5% above base, as rates rise, they pocket profits.

    2. Anyone concerned about budgeting and rising rates – Fix, or anyone on trackers should calculate BBR heading to 4% and then see if its still affordable – if so, stick to tracker/SVR. Anyone on an offset deal – you can make massive savings so stick with them if available as most existing deals are on low trackers and offsetting reduces the net rate to as low at 1.3% on many existing deals.

    3. Lenders SVRs are averaging 4.8% right now – and your stuck on this if you cant remortgage – at the mercy of their SVR.

    4. There is only one way rates can move – UP.

    5. OF GREATER WORRY TO BORROWERS MUST BE FALLING PRICES – this affects LTVs and if you wait, you lose equity and thus wont get the best rates at lower LTVs – even a 5% fall has big consequences – we are seeing more cases where surveyors are downvaluing remortgage cases.

  • Martin Tapper 21st February 2011 at 3:22 pm

    Dear Mr Rhodes
    Exactly what was the context that would change the meaning of such a comment?