Nationwide Announce Reduced Tracker Collar

In an announcement released late yesterday afternoon, the Nationwide Building Society has announced a relaxation of its previous stance concerning the collar applied to customers with tracker rate mortgages. Previously, the Nationwide had reported that it would be appliying a collar rate of 2.75 percent to customers with tracker mortgages, which would mean that none of yesterdays reduction in the Bank of England base rate would have been passed on to those customers.

In a change of heart, Nationwide have now confirmed that they will be applying a revised tracker floor at 2 per cent as a temporary concession for existing customers. The temporary collar of 2 per cent is a very real concession to existing customers of the Nationwide whose mortgage conditions stipulated a collar of 2.75 per cent.

Nationwide have confirmed that the temporary 2 per cent collar will apply to existing Nationwide customers who reserved a tracker mortgage between 1 December 2004 and 6 November 2008. The new floor will still remain as a condition of the mortgage, and Nationwide have reserved the right to reinstate the higher collar at any time in the future. However, whilst this means that Nationwide customers are unlikely to benefit from any further reductions in the base rate this year, many will benefit from a reduction in mortgage payments as a result of yesterday's reduction. Those customers who have taken Nationwide tracker mortgages since the begining of December last year already have a reduced collar of 1 per cent as part of their mortgage conditions, and so will benefit from the full reduction in bank base rate announced yesterday. Nationwide have also confirmed that they will be passing on the full reduction to customers on their standard variable rate, which will reduce from 4 per cent to 3.5 per cent with effect from 1 February.

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