Borrowers could see mortgage rates drop to 0%
The Financial times reported that borrowers who took out tracker rates last year could see their interest rate drop to zero-or possibly into negative territory-as lenders are removing the “collars” that prevent rates falling below a certain level.
Halifax and Nationwide have clauses that prevent existing customers seeing any benefit if the Bank of England base rate falls below 3% and 2.75% respectively. But both lenders have removed these collars following government pressure to pass on this weeks 1% cut to borrowers.
Some lenders could be paying as little as 0.99% since, a year ago, the cheapest tracker rate from Cheltenham & Gloucester, was priced at 1.01% below base rate.
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