Two of the UK’s largest mortgage lenders have announced that they will not enforce the collars on their tracker mortgages.
Collars are clauses in a mortgage contract that allow lenders not to pass on interest rate reductions once the Bank of England Base Rate falls below a certain level.
Halifax says that over half a million of its customers will benefit from its decision not to enforce a collar, which it’s terms and conditions said it had the right to introduce if interest rates fell below 3%.
Nationwide also announced that it would drop its 2.75% collar or ‘floor’. However there is now a floor of 1% on its new tracker rates.
A number of other Building Societies such as Yorkshire and Skipton still impose collars or minimum rates. Borrowers should check the terms of their current deal to see if one applies.