by Gary Webber
3. October 2009 14:09
Customers with the lifetime option on A&L tracker mortgages may have the best outcome of the 'zero percenters' mentioned yesterday.
Alliance & Leicester was one of the lenders offering customers a discount tracker at below base rate during 2007.
And whereas Halifax, C&G and Abbey mortgage customers face (admittedly mild) payment shocks – jumps of around 3 to 4 per cent interest – it turns out that some A&L customers will be sitting pretty on 1.49% for a while yet.
Clairvoyant customers, perhaps. You see, an option on Alliance & Leicester's two-year tracker deal allowed borrowers to choose to continue on a lifetime tracker at only 0.99 per cent above Bank Of England Base Rate.
At the time, when 0.29% trackers were available and the base rate was 5%, this might not have seemed such a desirable move. Hence 'clairvoyant'. Those customers were either capable of seeing what was coming, or... hmm. A thought occurs. You don't suppose they might have been talked into it by an A&L sales adviser, convinced that they were pulling a good move for the bank at the time?
Either way, the 0.99% tracker remains significantly below A&L's standard variable rate of 4.99&, and likely to be more competitive than any mortgage deal available on the high street for a while yet (compare HSBC's headline-stealing 1.99% tracker). And this select band of borrowers won't have to pay exit or arrangement fees in order to end up on this envy-inducing deal.
Moral of the story? Predicting interest rates too far ahead can make losers or winners out of any of us!
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