The Nationwide Building Society, which has recently topped consumer polls for everything from its credit cards to its customers service levels, has announced that it is looking to close the doors on new mortgage applicants by raising its mortgage interest rates, despite the fact that there have been two recent base rate cuts in the past three months, and another is expected in April.
Like other banks and building societies, Nationwide is experiencing severe problems in securing finance on the wholesale markets in order to fund its mortgage lending, and this is forcing the lender to take steps to reduce lending levels.
The two year tracker mortgage from Nationwide is to be raised by 0.57% for new borrowers, and its fixed rate deals will see rates go up by 0.2%.
Officials from the Nationwide stated that the society now needed to focus on quality rather than quantity, and was open about the fact that it was looking to actively turn business away with its increased interest rates. Officials added that the building society was simply responding to market conditions.
One mortgage official from the Nationwide said: ‘Nationwide sympathises with anyone who is concerned about the availability of affordable mortgages.
We continue to offer our customers a wide range of fixed and variable rate mortgages up to 95% loan to value with, as always, a focus on prudent and responsible lending rather than volume.’
This comes in light of a reported slump in mortgage lending across the board, although there was a very slight boost reported in February.
However, one economist stated: ‘The modest pick up in mortgage lending in February . . . is unlikely to be sustained. Buyer enquiries have slipped back to the lows seen in the wake of the Northern Rock crisis and this trend is likely to persist through the spring. The recent sharp rise in Libor rates is indicative of the reluctance of banks to lend to each other and suggests that mortgage finance will remain in short supply for some time to come.’
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