Friday, January 02, 2009

What's all the fuss about Nationwide?

I see that the Nationwide Building Society is supposedly heading for a ruck with the Treasury because it is planning on not passing on any further rate cuts to its customers on Tracker mortgages.

Basically it intends to invoke the the clauses in its mortgage contracts which says that the interest rate on the money cannot fall below 2% irrespective of what the base rate of the Bank of England may be.

What I want to know is what exactly is wrong with that? I have a fixed rate mortgage until 2011 currently, and am paying well above the base rate. I signed up to it, and thus I adhere to its conditions.

Likewise, if you signed up to a Tracker mortgage and the contract makes it clear that the interest rate will never fall below 2% even if the base rate from the BoE is 0% then tough shit.

12 comments:

Ed said...

Key here is 'makes clear'.. if the collar wasn't made clear in the Key Facts Document than you might have a legal case for challenging it. If it was in the KFD, I agree, tough luck.

Alan Douglas said...

On my Nationwide mortgage, from reading the papers, I did not expect to get the full 2nd reduction of 1 %, but I did.

Hooray for the Nationwide.

Par for the course from Labour though, they are a bank/B Soc, let's attack them.

ALan Douglas

Not a sheep said...

This economic recession is all the fault of the Americans, the nasty Tories and their greedy banking friends. Please pay attention the one true word of Gordon and Peter.

Blue Eyes said...

My mortgage won't go below 5% should I go crying to the government? No, because it was a contract I entered into and I am very happy with it. Why do people expect everything for free?

Curmudgeon said...

And of course to achieve further cuts the Nationwide would have to start paying negative interest to its savers, which obviously ain't gonna happen.

Anonymous said...

Please don't use the phrase "pass on" in the ludicrous fashion that the Labour spin-machine employs it.

Banks and building societies do not borrow at the base rate. There is, therefore, no base rate cut to "pass on".

LIBOR is far more relevant.

Oxbridge Prat said...

I note that the chancellor has not seen fit to reduce the Inland Revenue Beneficial loan arrangements - Official rate, the only mortgage rate over which he has direct control.

If you have an employer mortgage - rare but by no means unknown - and your employer charges less than 6.25% then the mortgage is treated as a taxable benefit in kind. Breathtaking double standards even for NuLabour.

Baron Hardup said...

In order to lend, Nationwide has to attract savers and investors. Shock horror, they will want to see some interest on their money. So when Nationwide runs its mortgate lending figures, the rates it charges will have to be more than the rates it gives. What is more the interest rates it offers will have to parallel other comparable rates in the market. More shock horror, this is the way the system works. How dreadfully inconvenient for government ministers with their several properties, and other property based investments in their "blind trusts" we are not allowed to know anything about. Privacy, and all that, don't you know? A privilege that I and the other peasants do not have.

Ttony said...

My mortgage with Nationwide guarantees a rate of 0.1% above BofE base rate. This thing about the rate they charge me not going below 2% must be in the small print somewhere, but I can cope with a 2% mortgage, and while interest rates for savers are lower than inflation, I can take advantage of the Nationwide's "pay up to £1500 a month extra off your mortgage without a penalty" offer.

(I was very, very lucky with the deal I got!)

Anonymous said...

Nationwide's still a mutual so it is hard for the Chancellor to nationalise it or to have the FSA shut it down - he'd be directly expropriating millions of voters. The B/S wants to be able to keep savings rates up for its depositors, which is only going to strengthen it in the longer term.

Windsor Tripehound said...

Careful Dizzy! Any more of this and soon you'll be suggesting that people should accept responsibility for their actions!

Roger Thornhill said...

The Government messes with contracts at its peril.

It is, however, typical of the Brown delusion and Authoritarian thinking in general - it wants to be "the daddy" that everyone has to get permission from or be beholden to.