Nationwide cheers savers with pledge to maintain interest rates

New chief executive Joe Garner, who took on the top job in April, said: “We will protect members who save regularly and who are building up a deposit to buy their first home – as a result, the Flexclusive Regular Saver at 5 per cent, the FlexOne Regular Saver at 3.5 per cent and the Help to Buy Isa at 2 per cent are being maintained at their current rates.”

Mr Garner added that Nationwide will pass on the interest rate cut, from 0.5 per cent to 0.25 per cent, to borrowers “in full”.

The move comes despite pressure the building society is under from the cut in rates.

Nationwide saw underlying pre-tax profits fall 6 per cent to £368m in the three months to the end of June, largely due to increased costs and a reduction in net interest income.

Nationwide said: “The sustained low interest rate environment and competition in core markets will maintain pressure on margins and we anticipate profits are likely to moderate in the period ahead.”

Nevertheless, residential mortgage lending hit £8.6bn in the period, an increase of 26 per cent on the same quarter last year.

The number of current accounts opened in the quarter rose 21 per cent to 139,000 and statutory profits increased from £379m to £401m, driven by “derivative and hedge accounting gains”.

On the impact of Brexit, the lender said: “Whilst it is too early to make clear impact assessments about the EU referendum outcome, the uncertainty generated could adversely impact investment decisions and consumer spending with a consequent impact on broader growth in the near term.

“The longer term impact will depend on a range of factors, not least the time it takes to reach an agreement with EU and non-EU economies, the nature of those agreements and the broader political situation.”

Earlier in the week, Lloyds Banking Group said it is still reviewing whether it will pass on a 25 basis point cut in the Bank of England base rate to its standard variable mortgage customers.

Britain’s largest mortgage lender is the last major high street bank holding out against the Bank of England’s call to pass on last week’s interest rate cut to borrowers.

“The Bank of England base rate is only one of a number of factors that we take into account when reviewing interest rates,” Lloyds said in a statement, four days after the UK central bank halved the key borrowing rate to a record low of 0.25 per cent in a bid to shore up the economy.

Bank of England Governor Mark Carney told banks last week they had no excuse for not passing on the cut.

The bank’s Monetary Policy Committee (MPC) voted unanimously to cut interest rates to 0.25 per cent, the first time it has altered it since 2009.

The central bank also published projections showing there would be little economic growth over the rest of 2016 and a sharp slowdown for the subsequent two years.