The latest bank rate cut has come as a blessing to tens and thousands of HomeOwners who now enjoy interest-free mortgages. Nearly 50,000 people opted for tracker mortgage deals which are now at least 0.5% below the base rate.
The cheapest deal is offered by Cheltenham & Gloucester, part of Lloyds TSB, at a tracker rate of 1.01% below the base rate. This means that there are almost 1,500 customers with the loan have not paid interest since February’s interest rate cut. The group also provided tracker deals at 0.5% or more below the base rate so as Halifax which provided two-year tracker at 0.51% below base rate for some months in 2007.
The Co-operative Bank has about five hundred customers and charged interest at 0.61% below base rate. Some buy-to-let lenders and the nationalised Mortgage Express provided mortgages with interest rates which fell to almost 0%. Now with the Bank announcing a record low of 0.5% to customers, all home owners will now pay no interest on their home loan at all. The Co-operative Bank is now charging 0.001% from its customers. Cheltenham & Gloucester (C&G) is also charging customers 0.001% interest while its computers are recording a rate of 0%. The customers will be paid the extra amount after the adjustments.
Legal advice is being sought by banks to ensure that they do not have to pay borrowers whose deals now charge negative interest.