Nationwide Building Society is not our favourite mortgage lender at the moment as you can see from the very angry response of many reluctant landlords who are going to be badly affected by the Society’s decision to increase mortgage rates by 1.5% for landlords who have been renting their properties for three years or more.
Many Nationwide customers affected by that rate hike are reluctant landlords who have been forced to rent out their homes as they could not sell them, or have had to move abroad for some reason. It seems that the vast majority are long term, once loyal customers, all of whom have turned against the Nationwide by varying degrees.
So Nationwide does seem to want mortgage customers after all as they are trying to attract customers with these latest mortgage rate reductions that come into effect from 1st July.
Presumably the mortgages being reduced are highly profitable to Nationwide, whereas those held by their reluctant landlord customers no longer hit the margin targets that Nationwide like to see.
You can see this by looking at the “product fees” that are integral to the Nationwide mortgages that will have prices reductions on Thursday. Nationwide appears to be welcoming customers for these products with open arms, whilst trying to shoo away its loyal customers who find themselves having to rent out their homes, often through no fault of their own.
Nationwide are reducing their two year fixed rate by 0.19% down to 3.9%, but note that there is a £99 “booking fee”, plus a £896 “product fee”.
Three year and five year fixed rates are also reduced by 0.9% and 0.19% but also come with the £99 booking and £896 booking fees, although they are prepared to give a first time buyer a £500 discount on the product fee.
So Nationwide is being all nice and cuddly to first time buyers, but what happens if that first time buyer has to rent out his home in the future? Not only will they be hit with another fee to seek permission to let their property, but Nationwide will hit them with a 1.5% surcharge as soon as the property has been let for three years.