The Nationwide is scrapping a mortgage promise which ensured that customers would pay no more than 2% above the bank base rate. Instead, customers will be charged 3.49% above the base rate under a new standard mortgage rate. The move will affect all borrowers who take out a home loan with the building society from 30 April.
The society introduced its base mortgage rate in 2001 to attract new customers. But it prompted a storm of complaints from existing customers who were left paying more with the Nationwide's then standard variable rate. Under the onslaught the society abandoned the dual pricing strategy and repaid £90m in compensation to some 400,000 out-of-pocket borrowers.