Just read this in the Independant

http://www.timesonline.co.uk/tol/money/property_and_mortgages/article5276492.ece

I am one of the ones affected by this 3% collar they have on their tracker.

cheers

Link not loading. !

Conman - heres the jist fo the article.

The Financial Services Authority indicated yesterday that more than half a million Halifax customers on tracker mortgages should benefit from further interest rate cuts even though the small print on their loans supposedly prevents them from doing so.

An estimated 550,000 Halifax borrowers with tracker mortgages, which move up and down in line with the base rate, appeared set to miss out on future rate cuts because the small print on their loans allowed Halifax to stop reducing rates once the base rate falls below 3 per cent.

Jon Pain, the FSA's retail market manager, said yesterday that this 3 per cent threshold, or “collar”, could be unenforceable. He said collars should be included in a lender's key facts illustration (KFI) - the mortgage documents given to every borrower. Halifax removed the details of its collar from its key facts in 2005.

Mr Pain told the Council of Mortgage Lenders (CML), the industry body representing the banks and building societies that make home loans: “If it is not [included] you run the real risk of both breaching our disclosure requirements and having an unfair contract term you cannot enforce.”

The Bank of England is widely expected to cut rates again tomorrow from 3 per cent. A borrower with an interest-only £200,000 tracker mortgage at 1 percentage point above the base rate could save more than £80 a month if rates fall by half a point, while a full point cut would cut £160 off their monthly mortgage bills.

Halifax, Britain's biggest mortgage lender, said it was considering its position. “We will make the decision on whether or not to exercise the option when rates do fall below 3 per cent,” a spokesman said. “We are noting the comments by the FSA and are looking into them.”

It emerged yesterday that the removal of details of the tracker loan collar from the Halifax mortgage key facts in 2005 was the result of concerns that the FSA raised over the complexity of the Halifax's mortgage documentation. The regulator was worried that the 11-page key facts statement was overblown for a document designed to highlight the key elements of the loan, and asked for it to be trimmed back. The collar detail was one of the items removed and relegated into the smaller print of the larger mortgage document.

A spokesman from the FSA defended the request to simplify the documentation, adding: “It cannot be right that to shorten your KFI you take out something which is required under FSA rules. It is a rule that a collar should be included in a lender's KFI.”

Thanks

Thanks for this info. I am with the C&G on a tracker 0.59% above the base rate. I'm normally quite thorough at reading smallprint, and there is nothing in the KFI I have. Getting through to them on the phone is a bit of a nightmare, but I think I will try now, as it will be even worse if the BoE cuts the base rate in just over an hour!

When I contacted Halifax last week, in the anticipation of the rates coming down today, and before I read that article in the Independant, I was told that it would be at the discretion of Halifax whether to decrease the tracker rates in line if the BoE rates went any further south.

Now, what sort of answer is that in light of the article which stated that Halifax had taken any refernce to the collar out of their KF documents.

I wait and see.

Just read an article on the BBC news site, it now appears Halifax are going to pass on the rate cuts to their customers.

http://news.bbc.co.uk/2/hi/business/7764543.stm

However, it still remains to be seen what other lenders will do with regards to their trackers.

cheers

And down to 2%, you beauties!

I am an independent mortgage broker in Leeds. Just been reading the postings on the forum about Halifax and the 3% collar. Have some good new for all you halifax tracker people.

I got an e-mail today from Halifax stating that all existing Halifax tracker mortgage customers will receive the full reduction in the base rate from today onwards, therefore removing the 3% cap for current tracker mortgage customers.

It would seem that they have seen sense!!!

Hi Giddy,

You will find that C&G do not have collars on their tracker mortgages!

I've got 3 BTL's with them at 0.76 bellow base, so its fantastic news at the minute.

I haven't found out yet what would happen if BoE drop the rates to say 0.5%, which is not inconceivable, will they then pay me??

hi there, just wondering if this rule about missing the collar info off the key fact would apply to building societies. Ihave a tracker at BBR +0.25. There is a collar of 3% but just checked my key facts and there is no mention of it. Any info wuld be great

I have been reading this week that if Banks and Building Societies have not included the detail of their collars on their KFI's then they will be hard pushed to be able to enforce them. If they do try to enforce them then the FSA will take a dim view of it and try force them to be ruled unenforceable! That is why the Halifax (+ another bank, can't remember who!) have stated they will not be eforcing the clause. To date Building Societies have not commented, but I think that they will have to come in line and also retract their collar clauses!