Nationwide Mortgage Broken Promise. Tuesday, 28th April 2009

Although promising that Nationwide mortgage holders would never pay more than 2% above the Bank of England base rate, one of the U.K.'s best-known mortgage providers has turned about face this evening. From 30th April those applying for a mortgage with Nationwide will not be able to take the base mortgage rate which is currently 2.5% and will instead be passed onto a new standard mortgage rate which will start at 3.99%.

It is a substantial change of attitude by one of the U.K.'s best-known mortgage companies and there are serious concerns that others will follow suit in the short to medium term. This could also severely hamper any potential recovery in the UK property market at a time when hopes have been growing and confidence appeared to be improving. The company has also announced that there will be no guarantees attached to the new standard mortgage rate which will effectively allow the company to move the rate upwards and downwards without any formal connection to UK base rates.

As to why Nationwide has chosen to take this route at this moment in time is something of a mystery although the company claims to be rebalancing the difference between savers and mortgage holders.