One of the UK’s largest Home Buyer Lenders, the Nationwide Building Society, has stopped permitting Home Buyers who are new customers to borrow on its standard variable rate (in the jargon known as SVR).

From Monday 1st December, the Nationwide’s Standard Variable Rate Mortgage was reduced to just 4.69%, That’s very much less than that of other lenders. But, it will only be available to Home Buyers who are existing borrowers, and who’s fixed or other special mortgage deals have come to an end.

All lenders have been under pressure from the government to pass on the latest reductions in interest rates to their customers. However, a Nationwide spokesman strongly denied the building society was flying in the face of the government’s wishes. He stated that the rate reductions have been fully passed on to existing clients, but that new clients will only have Fixed rate & Tracker Mortgages available to them. He also pointed out that the nationwide is one of the very few home loan providers who still provide Standard Variable Rate Mortgages to anyone at all.

Again the Nationwide is demonstrating that it’s not scared to plough it’s own furrow, and that it is exceptionally resistant to the herd instinct that from time to time has taken over the banking community. And based on recent history, who can say they are mistaken?

In the mid and late nineties the craze was for demutualisation of building societies, which effectively changed them into Limited Companies. The attraction at that time was that this would make it easy for these mortgage lenders to raise cash on international money markets and lend those funds out by buying lots of (amongst other things) Sub Prime Mortgages. At that time the Nationwide resolutely stood out from the rest of the lenders by declaring the advantages of remaining a mutual, owned by its members. The great majority of the money that it raised came from its own customers, and the great majorityof its lending was to its own retail Home Buyer customers. inbuilt in the nationwides system was a safety in knowing both the sources and the users of the business’s funds.

It has time and again argued that without shareholders it could afford to offer better rates to both savers and Home Buyers. That has been most visible in its base mortgage rate, which has unfailingly been about half of one percentage point below that of most of its rivals.

The bad news for the bulk of Home Buyers, who’ve become accustomed to shopping around & shifting Home Buyer loans regularly, is that companies like the nationwide feel justified in their traditional attitudes, and they’re going to continue with them, so they basically will not have the funds to lend to everybody who approaches them. That’s in spite of the fact that Savers are flocking back to the few remaining mutual societies.

That said. If I was trying to Sell my house right now; I’d be pointing all would be purchasers towards one of those surviving mutual lending companies.

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