tracker rate less than 0%

shazkhan111

if my tracker rate drops below 0% does that mean the mortgage provider will pay me credit interest on the balance of the mortgage?

lisyloo

Probably not.
Who are you with?
I believe it's LLoyds/C&G who have said they won't pay interest to borrowers.

It might eb the subject of a test case and legal argument, but all the initial reaction I've seen from lenders is a NO to your question.

ramtec

I think the way they presented it on TV last week was that the banks wouldn't expect their savers to give them money on their savings

bulletproof_1979

ramtec wrote: »

I think the way they presented it on TV last week was that the banks wouldn't expect their savers to give them money on their savings

Hate to jump to the defense of the banks, but that's a pretty good argument isn't it? Imagine the outrage if rates went to 0% and we started getting monthly bills instead of interest!!

simpywimpy

A&L are down to 1.75%. I would be revelling in it if it weren't for the fact that my savings rates are rubbish lol

HangTime

One related issue I've not heard mentioned anywhere yet is this:
If they DON'T start paying out on negative trackers, surely that is disadvantaging anyone who paid a higher arrangement fee to get a mortgage with a better rate which has subsequently dropped below zero? Take this as an example:

Mortgage product 1: Base rate -0.5% tracker, £499 arrangement fee
Mortgage product 2: Base rate -0.75% tracker, £999 arrangement fee

Baes rate then falls to 0.5%. Both mortgages are now charging the same rate of interest, 0%. The person who took out the second product paid extra upfront to get a better interest rate, but they are no longer seeing the benefit from it. If the bank isn't going to start coughing up and sticking to the quoted rate, should they be recompsensed for that?

Anon

Interesting point, but I believe it mentioned on the news that somewhere in the small print it mentions that the minimum is 0.0001% or something like that and the FSA had come out and said that mortgage lenders could not pay interest on mortgages as the whole nature of the relationship is borrower/lender in the contract and that cannot/does not reverse at 0%.

Anon

bulletproof_1979

simpywimpy wrote: »

A&L are down to 1.75%. I would be revelling in it if it weren't for the fact that my savings rates are rubbish lol

Well on the bright side if your savings are less than your outstanding mortgage your still winning on balance...

bulletproof_1979

HangTime wrote: »

One related issue I've not heard mentioned anywhere yet is this:
If they DON'T start paying out on negative trackers, surely that is disadvantaging anyone who paid a higher arrangement fee to get a mortgage with a better rate which has subsequently dropped below zero? Take this as an example:

Mortgage product 1: Base rate -0.5% tracker, £499 arrangement fee
Mortgage product 2: Base rate -0.75% tracker, £999 arrangement fee

Baes rate then falls to 0.5%. Both mortgages are now charging the same rate of interest, 0%. The person who took out the second product paid extra upfront to get a better interest rate, but they are no longer seeing the benefit from it. If the bank isn't going to start coughing up and sticking to the quoted rate, should they be recompsensed for that?

I'm guessing that's the purchasers lookout - banks aren't generally too interested in your motivations for buying something, just the T&C's you've signed up to, caveat emptor and all that...

Peelerfart

shazkhan111 wrote: »

if my tracker rate drops below 0% does that mean the mortgage provider will pay me credit interest on the balance of the mortgage?

I've heard they will as long as you bring the flying pig with you :rotfl:

Dan_1976

:T No because they dont owe you money, you owe it to them.

If you paid off your balance and more then they would pay interest on that, in theory anyway!

Credit card companies pay interest on minus balances, if you can sneak it through.

But if you dont ask you dont get!!