Nationwide has stopped its current variable mortgage rate of a 2 per cent maximum interest rate above the Bank rate of 0.5 per cent for new customers, according to a report from BBC News.
Whereas existing customers on Nationwide?s variable mortgage, called BMR, are guaranteed this interest rate maximum, new customers receive no such guarantee. Customers currently on a fixed-rate mortgage who then switch to a variable mortgage will now go on to Nationwide?s new variable mortgage: the Standard Mortgage Rate, currently at 3.99 per cent.
Those who already have a Nationwide fixed-rate mortgage, however, will automatically be switched at the end of this mortgage term on to the BMR with its rate of 2.5 per cent. After 30 April, those taking out a fixed-rate mortgage will transfer at the end of the mortgage?s life onto the SMR.
Nationwide explained that the reason for this change to their variable rate mortgages is to enable them to offer better deals to savers, as well as providing flexibility to their mortgage offers. Andy McQueen, mortgage director at Nationwide, said: ?We are currently in a very low interest rate environment, which can be challenging when balancing the needs of both our savers and our borrowers.?
Nationwide?s announcement will not have an effect for two years after tomorrow?s date, when new customers coming off the fixed-rate minimum term of two years will be switched to SMR instead of the BMR.
With the UK?s largest building society no longer guaranteeing this variable mortgage rate, only Lloyds/Cheltenham and Gloucester and Intelligent Finance now guarantee a variable rate of a maximum of 2 per cent above the Bank rate.
