Being a supp-orter of the mortgage code and its stance on advisers improving customer perception of the industry, I was dismayed to see the new Nationwide Building Society products and its claim that “Cat standards demonstrate Nationwide's commitment to open, honest and transparent mortgages.”
The budget options, which provide an up-front discount followed by a loading over years three to five appear, on the face of it, to be discounts with a five-year penalty period. However, they are actually capped rates where the cap is at 9.99 per cent.
Although this cap allows the budget option to fall into the voluntary Government guidelines, I feel these products do not follow the spirit of either the Cat standards or the mortgage code.
Surely, if any lender can bring out a discount with extended penalties and put this into a capped wrapper where the cap is so high that it is unlikely to be reached in the short term, this negates one of the main reasons for the introduction of Cat standards.
Irrespective of Catmarking, borrowers should be made aware of the features of products and these should be matched to borrowers' needs. We all know that when you ask a client: “Would you prefer flexibility?”, they almost always answer yes but if you then also ask “Why?” or “At what cost?” the borrowers tend to be more interested in the difference in payment levels.
Borrowers who are unlikely to use borrowback or payment holiday facilities are likely to benefit more from a good discounted rate or a good fixed rate irrespective of Catmark.