No great fan of mutuality when it ruled the roost in mortgage lending back in the early 1980s, I must confess to worrying about the Nationwide's future In this sense mutuals are rather like the black rhino. You may never encounter one, but you're reassured they are not extinct quite yet. The louder Nationwide's banking rivals shout about how useless it is, the more I suspect they would greet its conversion by raising their lending rates and slashing savers' rates across the board.It was the Nationwide in February that fired the first shot in the latest "mortgage war" by abolishing the difference between the rates it charges new and old lenders. In recent years mortgage lenders have lured new customers with ever more heavily discounted deals, while keeping existing borrowers on the traditional, higher, "Standard Variable Rate" (SVR).This strategy relies on customers' well-known inertia. Most of these discounted rates last for two or three years, after which you switch back to the SVR.
Big players such as Halifax like to claim homeowners can endlessly play the market by remortgaging every two or three years to take advantage of new deals. They do so in the full knowledge that hardly anyone can be bothered to remortgage more often than they absolutely have to.Significantly, despite the availability of many heavily discounted introductory deals,
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40 per cent of UK homeowners are still paying an SVR. The rest are split evenly between discounted and fixed rates.So Nationwide's decision to abolish discounts and the SVR, and introduce one unified rate for all its borrowers the "base mortgage rate" was a brave move, and a praiseworthy one Whether it will work or not is too early to say But one thing is certain. You would be a fool to remain one of the 40 per cent still on SVRs. You can find a cheap remortgaging deal online these days, so you have no excuse.j.willcock independent.co.ukJohn Willcock is Personal Finance Editor of 'The Independent'.He does not have the trappings of your average bookie. The beige check suit, greasy trilby and beer gut would look out of place on this spare, mild-mannered and bespectacled gentleman. Quick and easy online searches for all yourinvestment needs He does not have the trappings of your average bookie. The beige check suit, greasy trilby and beer gut would look out of place on this spare, mild-mannered and bespectacled gentleman.
