Halifax pledge on tracker deals

The Halifax mortgage lender says it will pass on any more cuts in bank rate to half a million existing borrowers who have one of its tracker deals.

The bank has a clause in its mortgage agreements which says it can chose to stop cutting its interest rates once the bank rate falls below 3%.

But the Halifax now says it will not in fact do this.

The Bank of England, as widely expected, has announced it is cutting its bank rate from 3% to 2%.

The Halifax said it would "pass on the full benefit from any future Bank of England base rate reductions - including any interest rate decision taken by the monetary policy committee today - to all of its existing customers with tracker mortgages."

Warning

Lloyds TSB made a similar pledge on Wednesday.

Earlier this week the Financial Services Authority (FSA) said any clause potentially imposing a floor on mortgage rate reductions might be legally unenforceable.

At the annual conference of the Council of Mortgage Lenders (CML) a senior FSA official pointed out that the relevant clauses in the Halifax paperwork had not been included in the key facts documents that had been issued to customers.

As such, he said, enforcing the policy of a 3% floor might amount to treating the customers unfairly.

"This has been our decision," said a Halifax spokesman.

"In making the decision, we have consulted with the FSA," he added.

A further half a million customers with Bank of Scotland, Birmingham Midshires, The Mortgage Business and Intelligent Finance - all part of the wider HBOS group - will also benefit from the reduction in bank rate.

But their contracts specify that cuts in bank rate will be passed on in full anyway.

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