Lloyds TSB tracker mortgage rates could go as low as 0%

08 January 2009 / by Rebecca Sargent
Lloyds TSB has vowed to pass on any interest rate cut that is announced today by the Bank of England, even if the rate falls to zero.

The potential cuts will be felt by customers through the bank's mortgage arm, Cheltenham & Gloucester. And, Lloyds TSB,

soon to become Lloyds Banking Group as it is set to merge with HBOS, has said that if the base rate is cut to zero, existing tracker mortgage customers will experience rates as low as zero as the lender does not have a collar in place.

Collars are common place on tracker mortgages and can mean that lenders are not obliged to pass on any interest rate cuts announced by the Bank of England.

Commenting Stephen Noakes, C&G marketing director, said: "No matter how much is cut from the Bank of England base rate, we'll continue to pass it on to existing customers until product rates reach 0 per cent.

"As soon as we know the impact of the base rate decision on wholesale funding costs, we will launch our new fixed and tracker rates. If we can make a saving on funding new mortgage products, we will look to pass this on."

However, whether mortgage rates will fall below zero where products are guaranteed to be below the base rate remains to be seen. But for now experts are predicting a relatively conservative rate cut of 0.5 per cent which would bring the base rate to the lowest level since records began.

The Bank of England is due to announce the results of the Monetary Policy Committee's meeting later today.

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