No Collar Clause: Lloyds TSB, C&G and Barclays

If you have a tracker mortgage with Lloyds TSB (LON:LLOY), Cheltenham & Gloucester (C&G) or Barclays (LON:BARC), you will be pleased to hear that these lenders do not have the hidden Collar clause in their existing tracker contacts. Trackers mortgages are pegged to the Bank of England base rate so are affected if the Bank of England raises or reduces the base interest rate.

With the Bank of England cutting the interest rate by a further 1 percent today, those that are on tracker mortgages, should benefit. Lloyds TSB vowed they would pass the full rate cut on to its existing customers.

For example if you held a tracker mortgage with Lloyds TSB at 0.75 percent over the Bank of England Base Rate, your new rate would be 2.75 percent as the base rate now stands at 2 percent, that if they stand by the word and do pass on the full rate cut.

However, if you hold a Tracker rate with Nationwide Building Society they have a collar clause that kicks in when the base rate falls below 2.75 percent. Other lenders like Halifax have a clause that gives them the option to not pass on the rate cut if the base rate falls below 3 percent.

Source: money.msn

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