£90m for thousands in home loan trap

by SEAN POULTER and JUSTIN HARPER, Daily Mail

Britain's biggest building society is to refund £90million to 400,000 homebuyers losing out from dual interest rates.

A Nationwide homeowner with a £100,000 mortgage could be in line for a bonus of around £500 as well as savings on future payments.

The decision centres on the introduction by lenders - including the Nationwide, Halifax, Abbey National and HSBC - of lower variable base interest rates last February. But the more attractive rates were only for new customers.

They did not apply to around 1.4million existing homebuyers on loan deals such as discount or capped mortgages.

These borrowers were told they would have to stick to the old variable rate.

This was 0.5 per cent higher with the Nationwide and 0.75 per cent higher at the Halifax.

The refund decision by the Nationwide turns the spotlight on the Halifax, which could face a £1billion bill for up to one million of its customers caught in the same trap.

The Nationwide acted after a ruling by the Financial Ombudsman, who looked into complaints by individual customers against the building society, the Halifax, Abbey National and HSBC.

The Ombudsman said the lenders were wrong and ordered refunds in those cases.

They included Chris Wright, a businessman, 51, from Shiplake, Oxfordshire, who won a refund of around £800 from the Halifax.

But the ruling did not have the power to force the banks to offer refunds to all those caught out.

If the Halifax agreed to across-theboard refunds, customers on a £100,000 mortgage would be in line for around £750, plus future savings.

However, the bank is resisting blanket refunds for fear of slashing profits and shareholders' dividends.

Despite the risk of a revolt by angry customers, a spokesman insisted last night: 'We will continue to treat complaints on their individual merits.'

The Nationwide believes that if its refund policy spreads across the industry, refunds of £1.5billion would go to well over one million buyers. Its move shows the divide between building societies, run in the interests of customers, and the big banks, who put shareholders first.

Chief executive Philip Williamson said: 'We have a different set of principles and values from the big banks.

'But that does not excuse them from behaving badly. You can do the right thing or the wrong thing.

'So far they appear to be doing the wrong thing. They are seeing what they can get away with.'

Delroy Corinaldi, of the Consumers-Association, said: 'This is fantastic news from Nationwide.

'But the decision by Halifax and HSBC not to do the same means innocent consumers who have suffered will not be compensated. They should do the honourable thing.'

Nationwide customers will not receive a cheque but will have their mortgage balance reduced by the figure they have overpaid.

If homeowners want the cash, they can underpay on their future mortgage payments without penalty.

Those affected will also be put on a new interest rate, which is 0.5 per cent lower, from April 1.

Although, it is applying the Ombudsman ruling to all affected consumers, the Nationwide denies any wrongdoing and accused the other lenders of failing customers.

There is still doubt about how Abbey National will act.

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