|    FM Home   |    FM News   |    FM Forum   |    FM Blog   |   
Saturday 22nd of August 2009
January 2, 2009

Nationwide opts out of base rate cuts


by Gill Montia
Nationwide opts out of base rate cuts

Nationwide Building Society has announced that it will no longer pass on cuts in the Bank of England’s base rate to the majority of its tracker mortgage customers.

Despite Government pressure to keep the cost of borrowing in line with reductions in the base rate, the lender is invoking a clause that allows it not to follow the base rate once it falls below 2%.

The move will affect around 250,000 homeowners and is designed to protect Nationwide’s savers who have been losing out since the Bank began to cut the base rate aggressively, in November.

According to its mortgage small print, the building society could have evoked the “collar” or “floor” when the base rate fell below 2.75% but instead passed on December’s 1% reduction in full.

At the same time it cut savings returns by an average of 0.87%.

A spokeswoman has explained that concern for savers means the building society has taken today’s action to avoid being forced into a position where it has to cut savings rates more aggressively than it would choose.

The Bank of England’s Monetary Policy Committee will be meeting next week to decide on rates for January.

Analysts are expecting a further cut of between 0.5% and 0.75%.

Discuss this in the Finance Markets forums

Story link: Nationwide opts out of base rate cuts


Add to Bookmarks:

ADD TO DEL.ICIO.US     ADD TO DIGG     ADD TO FURL

ADD TO STUMBLEUPON     ADD TO YAHOO MYWEB     ADD TO GOOGLE     ADD TO SPURL

 

Tags: base, collar, , floor, , ,

 

Previous: « World stock markets suffer worst ever year
Next: Brits told to pile on the pounds in 2009 »

Visited 1965 times, 5 so far today

No Comments »

No comments yet.

RSS feed for comments on this post.

Leave a comment