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Collars will die out, says Boulger

Ray Boulger is predicting that lenders will steer clear of collars on tracker deals in future.

Boulger, senior technical manager at John Charcol, says Halifax’s decision to override its 3% collar was brought about by pressure from the government and the regulator.

He says: “The fact that two major lenders have baulked at the idea of enforcing collars may influence other lenders to avoid setting them up in the first place.

“Given the low base rate and increased tracker margins I doubt lenders will be setting collars on new products.”

Halifax will pay a price for its decision, analysis from Mform.co. uk reveals.

The online mortgage company calculates that the lender will face an annual bill of £575m as a result of the policy change.

Francis Ghiloni, marketing and business development director at Mform.co.uk, says: “Considering taxpayers have been kind enough to bail Halifax out, you might say this is the least it could do.

“Existing borrowers are benefiting but the concern must be that the £575m Halifax is stumping up will be recouped elsewhere. New borrowers will have to pay and that will delay any revival in the mortgage market.”

Nationwide has also dropped its 2.75% collar but other mutuals including the Yorkshire and Skipton have kept their 3% collars in place.

A spokesman for Skipton says: “The collar applies to about half our trackers – around 12,000 mortgages. There are products with caps at the other end which customers have benefited from so it makes sense that the collars will be enforced when the market goes the other way.”

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