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Nationwide rate pledge costs £300m

Nationwide has revealed that its pledge to cap its mortgage base rate 2 per cent above Bank of England bank rate has cost it £300m in the six months to September 30.

It says that with bank rate currently staying at 0.5 per cent, there is less incentive for borrowers to move products and so there are more borrowers on the base rate.

The society is also contin-uing to waive the contractual floor on tracker mortgages of 2.75 per cent.

The floor has been lowered to 2 per cent, a move that the company says has saved its members £34m in the mortgage market over the sixmonth period.

The news comes as Nationwide reveals a 26 per cent increase in profits in the first half of its financial year.

Nationwide saw gross residential mortgage lending of £6bn in the first six months of this year, an 8.5 per cent share of the market.

Chief executive Graham Beale says: “In mortgages, we have preserved our position, with a gross lending market share of 8.5 per cent and we are working hard to keep the housing market moving against a backdrop of subdued conditions.”

Emba group sales and marketing director Mike Fitzgerald says: “When you see their full results, you can see that while the base mortgage rate cap has had an impact, the overall sales levels have been very strong so the benefits are there to see.”

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