The UK’s biggest building society Nationwide has announced that customers taking out new mortgages will no longer revert to its market-leading standard variable rate at the end of their deal.
Nationwide said anyone who takes out a loan from April 30 will instead go on to its new standard mortgage rate (SMR), currently 3.99%, when their deal expires.
The SMR is considerably higher than the group’s current standard variable rate (SVR), which it calls the base mortgage rate (BMR), of 2.5%.
Nationwide has lowest SVRs
The society currently boasts the lowest SVRs on the market, along with Lloyds TSB and Intelligent Finance, after it pledged the rate would never be more than 2% above the Bank of England base rate. Only a handful of lenders offer SVRs of under 4%.
Nationwide said the change would give it greater flexibility to price its new mortgage deals and offer better rates for savers.
Around a third of the group’s mortgage customers, just under 500,000 people, are currently on its BMR, which is considerably cheaper than any of the remortgage deals the group has on offer.
Which? hopes for better deals
Which? senior researcher Cathy Neal said: ‘It’s disappointing that new Nationwide borrowers will no longer benefit from the guarantee of reverting to an interest rate that will be no more than 2% above the base rate.
‘We hope that this really will result in Nationwide offering better mortgage deals in future – no Nationwide products currently appear in our online tables of best mortgage deals.’
Customers who are already on the BMR will remain on it unless they remortgage, and those who are on other deals taken out before the end of this month will continue to revert to the BMR when their current loan comes to an end.
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