Borrowers who took out tracker mortgages last year could see their interest rate drop to zero – or possibly enter negative territory – as lenders are removing the so-called “collars” that prevent rates falling below a certain level.
Halifax and Nationwide had clauses that prevented existing customers seeing any benefit if the Bank of England base rate fell below 3 per cent and 2.75 per cent respectively. But both lenders have removed these collars following government pressure to pass on this week’s 1 percentage point rate cut to borrowers.
