The Nationwide Building Society has said it will not pass on any further cuts in UK interest rates to most of its tracker mortgage customers.
The Nationwide Building Society has said it will not pass on any further cuts in UK interest rates to most of its tracker mortgage customers.
A clause in the contracts of 250,000 customers says the Nationwide does not have to lower its rates when the Bank of England's rate falls below 2.75%.
A clause in the contracts of 250,000 customers says the Nationwide does not have to lower its rates when the Bank of England's rate falls below 2.75%.
While it did not enforce this when the Bank Rate fell to 2% in December, it now says rates will fall no further.
While it did not enforce this when the Bank Rate fell to 2% in December, it now says rates will fall no further.
It says it is doing this to protect savers from sharp interest rate cuts.
It says it is doing this to protect savers from sharp interest rate cuts.
TRACKER MORTGAGE COLLARS Abbey: Nominal 0.001% collar, but no immediate plans to enforce it in futureAlliance & Leicester: No collar and no plans to bring one inBarclays: No collar and no plans for oneHBOS: No plans to enforce their collar policy, plan to pass on rate cuts in full, no plans to enforce collar for new customersHSBC: Do have clause in contracts reserving the right not to pass on rate cuts to customers. But they are not enforcing this, nor do they plan to in futureLloyds TSB: No collar and no plans for one in the futureNationwide: Enforcing collar of 2%Northern Rock: No collar, and no plans for one, but situation under constant reviewNorwich & Peterborough: Enforcing 3% collarRBS Natwest: No collar and no plans to introduce oneSkipton: A 3% collar is in force
TRACKER MORTGAGE COLLARS Abbey: Nominal 0.001% collar, but no immediate plans to enforce it in futureAlliance & Leicester: No collar and no plans to bring one inBarclays: No collar and no plans for oneHBOS: No plans to enforce their collar policy, plan to pass on rate cuts in full, no plans to enforce collar for new customersHSBC: Do have clause in contracts reserving the right not to pass on rate cuts to customers. But they are not enforcing this, nor do they plan to in futureLloyds TSB: No collar and no plans for one in the futureNationwide: Enforcing collar of 2%Northern Rock: No collar, and no plans for one, but situation under constant reviewNorwich & Peterborough: Enforcing 3% collarRBS Natwest: No collar and no plans to introduce oneSkipton: A 3% collar is in force
"Savings rates are at an historic low and this move means we will not be forced into a position where we could have to cut savings rates more aggressively than we would otherwise like to," a Nationwide spokeswoman said.
"Savings rates are at an historic low and this move means we will not be forced into a position where we could have to cut savings rates more aggressively than we would otherwise like to," a Nationwide spokeswoman said.
The decision to halt cuts in most of its tracker rates will affect about a quarter of a million of Nationwide's 1.5 million mortgage customers.
The decision to halt cuts in most of its tracker rates will affect about a quarter of a million of Nationwide's 1.5 million mortgage customers.
Of the other lenders contacted by the BBC, only the Norwich & Peterborough and Skipton building societies said they would also not pass on any further rate cuts to tracker customers.
Of the other lenders contacted by the BBC, only the Norwich & Peterborough and Skipton building societies said they would also not pass on any further rate cuts to tracker customers.
The UK's largest mortgage lender, Halifax, confirmed that it would continue to pass on any further rate cuts to its existing tracker mortgage range.
The UK's largest mortgage lender, Halifax, confirmed that it would continue to pass on any further rate cuts to its existing tracker mortgage range.
A clause in the contract of the majority of Nationwide's customers with tracker mortgages says that the building society does not have to lower its rates when the Bank of England's Bank Rate drops below 2.75%.
Collar clauses
However, when the Bank of England cut the rate to 2% in December, Nationwide waived this so-called "collar" clause, and passed on the one percentage point cut in full.
The interest rate on a tracker mortgage rises and falls in line with changes to the Bank of England's key lending rate.
A clause in the contract of the majority of Nationwide's customers with tracker mortgages says that the building society does not have to lower its rates when the Bank Rate drops below 2.75%.
However, when the Bank of England cut the Bank Rate to 2% from 3% in December, Nationwide waived this so-called "collar" clause, and passed on the one percentage point cut in full.
Some of Nationwide's tracker customers are currently paying an interest rate of only 1.24%, as they have deals giving them rates of 0.76% below the Bank Rate.
Some of Nationwide's tracker customers are currently paying an interest rate of only 1.24%, as they have deals giving them rates of 0.76% below the Bank Rate.
The freeze on cuts will only apply to those customers with a collar of 2.75%, it will not affect those who have taken out loans since November with a lower collar of 1%.
The freeze on cuts will only apply to those customers with a collar of 2.75%, it will not affect those who have taken out loans since November with a lower collar of 1%.
Nationwide also says it will pass on any further cuts in the Bank Rate in full on its standard variable rate (SVR) which currently stands at 4%.
Nationwide also says it will pass on any further cuts in the Bank Rate in full on its standard variable rate (SVR) which currently stands at 4%.
The Bank of England's rate-setting Monetary Policy Committee will hold its next meeting next week, with most analysts expecting further rate cuts.
The UK government has called on mortgage lenders to pass on any cuts in full to their customers.
Do you have a tracker mortgage with the Nationwide? Do you have a savings account with them? Send us your comments on this story using the form below:
Do you have a tracker mortgage with the Nationwide? Do you have a savings account with them? Send us your comments on this story using the form below:
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