New customers at the Nationwide will not be able to obtain mortgages on its standard variable rate.
The Nationwide has lowered its standard variable rate (SVR) - but it will only be available for existing customers of the mortgage lender.
As of yesterday (December 1st), the SVR was set at 4.69 percent, lower than many other lenders. However, only customers at the Nationwide whose agreements have ended will be able to take advantage of it.
The government has attempted to encourage mortgage lenders to provide more loans and pass on the 1.5 percent interest rate cut as the crisis in the property market continues. However, figures from the Bank of England revealed the number of loans being approved fell again in October.
Ray Boulger, from mortgage broker John Charcol, said that the Nationwide's decision showed the government was not succeeding. "Less than a month after the... master plan to intimidate the major lenders into passing on the full 1.5 percentage point rate cut in their SVR, the one with the lowest SVR and by far the largest proportion of its lending on SVR pulls the plug for all new lending on that rate. Not only did the master plan not last for life, it didn't even last until Christmas."
However, the Nationwide argued that it had to withdraw the SVR because of the large demand for it. A spokeswoman said: "Other lenders have already withdrawn their SVR products and we have attracted a lot of interest with ours. We need to be prudent and manage the mix of our business for our members."
