Banks withdraw tracker deals
Updated on 06 November 2008
Mortgage lenders have scrambled to withdraw their tracker deals following a surprise 1.5% cut in interest rates.
Around 30 lenders have pulled their range of the loans, which automatically move up and down in line with the Bank of England base rate, for repricing.
Among those who have withdrawn the deals for new customers are major groups such as Halifax, Nationwide, Abbey, Barclays' lending arm the Woolwich and Lloyds TSB.
A number of other lenders had previously hiked their tracker rates by up to 0.8% ahead of the base rate cut.
Ray Boulger, senior technical manager at John Charcol, said: "By the end of today there will be very few trackers left on the market.
"We will have to wait several days before we see them re-emerge and know by how much lenders have hiked their rates above base rate."
The race to withdraw tracker deals is bad news for new mortgage customers as it suggests they will not see all of the benefit from the cut.
Not only are lenders likely to increase the margin they charge above base rate on the products, but they may also take the opportunity to increase the size of deposit they demand from borrowers.
Existing customers with standard variable rate (SVR) mortgages are also not expected to benefit from the full 1.5%, with Mr Boulger predicting the number of lenders who reduce their SVRs by this amount will be in single figures.
Lloyds TSB, which also lends under the Cheltenham & Gloucester brand, was the only group to announce immediately a reduction to its SVR.
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