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Last Updated: Monday, 27 November 2006, 19:35 GMT
Mortgage 'U-turn' at Nationwide
Nationwide website
This policy will change from 1 December
The Nationwide building society will drop its policy of offering the same mortgage deals to all of its customers.

It first adopted the policy in a blaze of publicity in March 2001, saying it was unfair for existing borrowers to be expected to subsidise new ones.

From 1 December, the Nationwide will offer different rates to people that take out new mortgages to buy a home and those that are remortgaging.

The Nationwide said the changes would let it offer borrowers better deals.

"These changes enable us to offer really competitive mortgage deals to customers whether they are changing home, changing lender or changing their deal," said executive director Stuart Bernau.

New rates

Under its new system, the Nationwide said it would offer deals with an interest rate from 4.73% a year to new or existing customers taking out a mortgage to finance a property move.

Current customers who want to remortgage, or new customers who want to move their home loans from another lender, and those looking for an additional loan, will be charged from 4.99%.

The changes mean that a first time buyer will be charged a lower rate of interest - on a fixed rate or tracker deal - than an existing customer of the Nationwide who is simply looking to change mortgage and find a cheaper deal.

The Nationwide's standard variable rate will be the same for all borrowers, at 6.49%.

'About turn'

Ray Boulger, of the mortgage brokers Charcol, said he was surprised at the Nationwide's change in policy.

"It's quite incredible that a company which has been advertising as a key feature the fact that they offer the same 'great' deals for all customers could do an about-turn like this," he said.

"There's no way you can legitimately claim you're offering the same deals for everybody if your existing customers don't have access to the cheaper purchase rates."

Earlier this month the Nationwide, which is in the throes of taking over rival Portman, reported that its half-year profits had risen rise by nearly a third, thanks to a 50% increase in mortgage lending.

When the Nationwide first introduced its policy it provoked an immediate slump in new business, but this quickly recovered as the society has generally offered cheaper variable rate deals for mortgages than the main banks.

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