2. October 2009 09:35
I think it's safe to say that Halifax will be glad to see the back of this particular mortgage deal.
In 2007, the nation's biggest mortgage lender was offering a two-year tracker mortgage at 0.51% less than the base rate.
That means that since April this year, approximately 7,500 borrowers on that deal have been paying zero interest.
Zero! And that's on top of three or four months leading up to April where the base rate was declining rapidly; by contrast, at the same time Halifax would have been paying unusually high premiums on inter-bank borrowing during the same period.
Sadly for those mortgage-holders—and gladly for the now state-owned (via Lloyds Banking Group) Halifax—the deal has now just about timed out. November will mark the two-year anniversary since the last -0.51% tracker was withdrawn.
Technically, borrowers should have been owed 0.01% interest, but in practice the calculation was just ignored and borrowers repaid only the capital. These borrowers now face a sudden jump in repayments as they revert to Halifax's SVR of 3.5 per cent. However, Halifax is believed to be offering the a 0.51% discount on this rate if they sign up to a discounted deal for two years (i.e. with tie-ins).
Tracker mortgages today
The picture for trackers now is (as you'd expect) very different: positive margins of three per cent are commonplace. Of course, a lot has changed in those two years, and few predicted that those base rate changes would arrive at such a rate.
Which makes us wonder: in two years' time, what will repayments be like for those paying three per cent above base rate?
Food for thought!