Nationwide, the UK’s biggest building society, is to scrap its highly publicised guarantee that new and existing customers will receive the same deals.

From December 1, existing Nationwide customers who want to switch deals, borrow extra cash or remortgage will be penalised by higher rates.

The U-turn drew criticism from mortgage brokers, who said that Nationwide had backed down on its principles.

In a recent advertising campaign, the society, whose slogan is “proud to be different”, promotes its promise to offer all customers the same rates.

The advertisements criticise other lenders that offer better deals to new clients but fail to reward the loyalty of existing customers.

Melanie Bien, of Savills Private Finance, the mortgage broker, said: “This is a real shame. Nationwide made a principled stand, promising existing and new customers that no one would receive preferential rates. This guarantee no longer stands.”

The new policy favours first-time buyers and people moving house.

On a two-year tracker deal, remortgagers on a rate of 4.99 per cent will pay £21 a month more than homebuyers, who will receive a rate of 4.73 per cent.

On average, rates for homebuyers will be 0.1 percentage points lower than for remortgage customers.

For example, a first-time buyer borrowing up to 90 per cent of the property value will pay 4.98 per cent on a two-year fix, compared with 5.08 per cent for remortgagers.

Ms Bien said: “Translated, Nationwide’s change of policy means it can now offer more competitive rates for first-time buyers by charging others a higher rate.”

The switch to offering rates that vary depending on the borrower’s circumstances brings Nationwide into line with Halifax and Abbey, which offer different rates to different kinds of borrower.

Other lenders that offer the same deals to all customers include Northern Rock and Alliance & Leicester. New and existing customers who are in the same circumstances will still get the same rates.

Stuart Bernau, an executive director of Nationwide, said: “By making these changes, we will achieve greater flexibility and will be better placed to offer all our mortgage customers what they want.”

Nationwide will remove the remortgage administration fee of £99 and give existing customers a £100 discount off their reservation fee if they switch to another product.

Ms Bien said: “This softens the blow, but it really is a token gesture.”

Brokers said that the U-turn was a blow for mutuality. Ray Boulger, technical director at John Charcol, said: “This U-turn hurts the building society movement because Nationwide has been the most vocal in making claims about the benefits of mutuality. These claims now look rather hollow.

“A large part of Nationwide’s advertising was based around how good it was that they were a mutual. Now it seems that they are doing the same as what they criticise others for doing. It is hypocritical.”

The move was also condemned for hurting those customers who had taken out Nationwide mortgages because of its policy on new and existing customers.

Mr Boulger said: “Many borrowers are likely to have been attracted to them because of this stance, recently with some witty adverts starring Mark Benton as a bank clerk criticising other lenders for reserving their best deals for ‘brand new customers only’.

“Nationwide claimed to pride itself on not discriminating against loyal customers. There can’t be much pride left after today.”

Lending weight

It sold 2.9 million mortgages last year, up 12 per cent on previous year