Cutting tracker rates could cost Halifax £575m

Halifax’s decision to pass on rate cuts to tracker borrowers will cost the lender up to £575m a year, reveals analysis from mform.co.uk.

Mform.co.uk says that existing borrowers at most major lenders can now chase the Bank of England base rate down with no limits on how low it can go but for new borrowers with small deposits the best is around 5.19%.

The online mortgage company says Halifax will likely raise rates for new borrowers to make up for passing on last week’s 1% cut to existing tracker borrowers.

Halifax’s average loan is £115,000 which means a 1% cut equates to £1,150 a year for their reported 500,000 customers.

Francis Ghiloni, marketing and business development director at mform.co.uk, says: “Interest rates can go up as well as down but for the next year at least it looks like it will be a case of ‘How low can you go?’ for most tracker borrowers.

“The Halifax decision to cave in to pressure is great news – and considering taxpayers have been kind enough to bail them out – you might say it is the least they could do.”

He adds: “Existing borrowers are benefiting but the concern must be that the £575m Halifax is stumping up will be recouped somewhere else. New borrowers will have to pay and that will restrain the much-needed revival in the mortgage market.”