Nationwide has revealed it has taken a £450m hit on its profits this year by sticking to the pledge to existing borrowers not to raise its standard variable rate by more than 2 per cent above base rate.
The building society still made £212m profits for 2009 but this was a drop of 46 per cent on the £393m profits for the previous year.
Skipton Building Society, which controversially scrapped its SVR ceiling and raised its rate earlier this year, saw a 189 per cent increase in its profits from £22m to £63.5m when it posted its 2009 results in February. Law firm Leon Kaye has lodged a complaint with the Office of Fair Trading about Skipton’s SVR move. Nationwide says: “We continue to support our members by honouring our pledge, ensuring that the majority of our mortgage customers have access to a rate which is capped at 2 per cent above Bank of England base rate.
“We estimate the cost of maintaining the rate at this level relative to other rates charged in the market has been in excess of £450m over the past year.”