No collar clause in existing, RBS, Northern Rock and C&G mortgage deals

Nov 10, 2008 | Comments 2

Royal Bank of Scotland (RBS) Bradford & Bingley, HBOS who own Halifax, Northern Rock, Nationwide Building Society all followed the lead from competitors Lloyds TSB and Abbey in passing the full 1.5 percent Bank England Base interest rate cut onto its customers.

Most homeowners who have either a mortgage loan that is attached to their banks Standard Variable Rate (SVR) or who have a Tracker rate mortgage with any of the banks listed above will be rejoicing in the fact they will be saving on their monthly mortgage repayment after the surprise move on Thursday by the Bank of England cutting the base interest rate by 1.5 percent.

Unfortunately if you hold a mortgage with HSBC, Barclays which own Woolwich, First Direct, Skipton BS, Yorkshire BS, Coventry BS or Britannia BS you may not see the benefit from the rate cut as they are still under review by the banks bosses.

However with most banks pulling their Tracker rate deals before the Bank of England cut and many banks putting up rates it’s doubtful if customers will benefit fully from the interest rate cut.

With economists predicting that the Bank of England is likely to cut the base interest rate by a further 1 percent taking it to just 2 percent there is a word of warning, take a close look at the small print in your mortgage deal, buried among the terms and conditions on some mortgage products will be a clause stating that the lender can freeze further reductions should the base interest rate reach a particular level. Many lenders have this collared at 3 percent.

Here are lists of lenders who do not have this clause in their current mortgage contracts, Royal Bank of Scotland (RBS), Northern Rock, C&G and Alliance & Leicester. However Yorkshire BS, Skipton, Halifax and Nationwide all do have collar clauses in most or all of their mortgage deals.

Source: Telegraph

Filed Under: Interest Rates • Mortgage News

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  • Elaine

    We have a Connection(Tracker)mortgage with Northern Rock.We have been told by them that although there is no “Collar” clause in our contract, they reserve the right to pass or not pass on any interest rate reductions. In the light of the government guidelines, is it possible we will not get the newest reduction of 1% passed on even though there is nothing in writing?

  • Keith Clarke

    I spent a life in the City, commencing 1955, including handling communications for the world’s leading investment bank during the 1987 crisis.

    I am ashamed of my former colleagues current immoral and unethical behaviouur towards their so called “customers” from the very very top of the City down to the myriad of small financial operations.

    I must say however, that the cause of the loss of “my word is my bond” philosophy which maintained London as the “benchmark” financial centre of the world was our national clamour for “inclusion”, “equality” and “best practice”.

    Inclusion brought in a myriad of people from diverse cultures and principles resulting in the need to “police and record” their activities. History shows the LAW can not on it own control those without honest intent.

    Equality resulted in the employment and promotion of the unsuitable and contributed towards the “bonus” system, seen as necessary to hang on to those who at least had the necessary ability.

    “Best Practice” is PLAGIARISM in disguise, condemmed universally because “plundering” from others may give a “procedure” to follow but it does NOT give the recipient the ability to understand the often complex reasoning process as to “how those conclusions were reached”.

    Thus, ticking boxes or following a computer generated set of instructions led to a “credit crunch” in the City and “human disaster in Harringay”.

    Hopefully, this severe recession will see a shakeout of the “box tickers” and a time for reflection and the adoption of a positive philosophy for those with ability.