HOMEOWNERS in the region who have mortgages with the Nationwide are set to receive a £200 windfall.

The building society is preparing to give 400,000 borrowers in the country refunds totalling £90m after charging them a higher mortgage rate than other customers.

The move comes after the Financial Services Ombudsman ruled that the building society had acted unfairly in keeping an individual borrower on a mortgage rate linked to its higher standard variable rate, instead of transferring it to its new lower base mortgage rate.

The refund will restore customers to the position they would have been in if they had been transferred to the lower rate as soon as it was introduced last March.

When the building society launched the base mortgage rate, which is 0.5 per cent lower that its standard variable rate, it immediately moved more than 500,000 customers to it.

It pledged to move other borrowers to the new rate when their existing deals came to an end, but the ombudsman ruled this was unfair.

The Nationwide will now bring the process forward so all customers are on the lower rate.

Philip Williamson, Nationwide's chief executive, said: "The introduction of our base mortgage rate was a major strategic move to bring fairness to our borrowers.

"We believed that this strategy was already the fairest in the UK market and we still do.

"The Ombudsman has decided that, in one individual case, we did not go far enough."

The standard variable rate will be scrapped from April 1 and all borrowers will have their mortgages linked to the base mortgage rate.

This lower rate is 4.74 per cent now, compared with 5.24 per cent for those on the standard rate.

Those who have not been moved to the lower rate yet will be written to by the Nationwide by the end of March and will receive refunds by the end of June.