Mortgages Uncovered

As one of the UK’s largest mortgage lenders, Halifax is threatening to further deprive its half a million homeowners and customers of any further rate cuts due to unseen clauses written into tracker contracts.

As many millions of Britain’s homeowners thankfully welcomed the BofE further 1.5% interest rate cut to bring the rate to 3% (which is £4 billion pounds worth of savings to over 25 million homeowners in the UK that have a tracker mortgage, this converts to £166 a month saving on someone with a £200K loan.

Halifax tracker customers though will likely not feel any benefit since the building society have imposed a clause of 3% or below on tracker mortgages means that the Bank do not have to pass on the cuts.

This clause also applies to another Halifax company called BM Solutions (it does not include Intelligent Finance), although there is a current investigation by the FSA into the Halifax clause as it may break their rules due to it not being clearly highlighted in the mortgage documents.

MPs are now urged Halifax to immediately drop this condition from their policies after it was made known that to withhold a cut of 0.2% alone deprives customers of savings in excess of £140m.

Michael Fallon, vice-chairman, Commons Treasury committee, said:

“These types of clauses are redundant in the new era of the low rate — there’s no excuse for them. Halifax initially played down its intention to rely on the clause, saying it had “no appetite” to withhold Bank rate cuts. Last week, though, it said it might invoke the clause after all. “It is . . . important to recognise that all banks have a need to balance savers’ and mortgage borrowers’ rates.”

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