New Nationwide mortgage system to be implemented

Date:Wednesday 29th April 2009
Author: Max Freedman

Nationwide is to implement a new mortgage lending system involving two tiers.

The building society has revealed that existing customers who have its variable-rate home loan have a guarantee that they will pay no more than two per cent above the base rate of interest.

However, new customers will have no such security when their fixed-rate deals come to an end and they move to a variable-rate offering.

Nationwide said the decision to move to a two-tier system had been difficult.

Mortgage director at the firm Andy McQueen pointed out that the UK's mortgage market has experienced "fundamental changes" due to current economic conditions.

He added: "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."

Following several months of interest rates falls, the UK's base rate of interest presently stands at 0.5 per cent.