Which? believes Nationwide may be in breach of consumer regulations and its contractual terms over its plan to increase mortgage rates for some of its customers by 1.5 per cent.
Nationwide is to hit its residential mortgage customers who let out their properties for six months or more with a 1.5 per cent increase on their mortgage payments from September 1, 2010.
The Office of Fair Trading told Money Marketing the case was an issue for the FSA, but the FSA has refused to comment.
Which? wrote to Nationwide in June after receiving reports from customers over the rate increase.
Nationwide says the reason for the increase is due to the administrative cost and risk involved with long-term letting.
A Nationwide spokesman says: “Nationwide offers mainstream residential mortgages designed and priced for people who live in their homes – we have a specialist lending arm, The Mortgage Works, for people looking to take a buy to let mortgage.
“There is an administration cost and a degree of additional risk involved when a borrower lets their property over the long term, which is why buy-to-let mortgages are priced higher – typically 1-2 per cent – than residential mortgages. It is fair that those who let should meet these additional costs rather than the membership as a whole.”
Last week the Nationwide board came under fire from angry members at its annual general meeting over director pay for the coming year.