A couple who signed up to an interest-only tracker deal are being charged a nominal sum thanks to falling interest rates, Telegraph.co.uk has reported.
Ben Cameron and his wife signed up to the deal in December 2007 with Cheltenham & Gloucester, where their base rate of payment was 5.5 per cent. Recently though that has fallen to 0.5 per cent, which as a consequence cuts their monthly bill from around ?1,500 to nothing.
Since the building society’s computers aren?t designed to deal with payments of nothing, they default to charging 1p, which the couple will have to pay per month.
The Camerons aren?t the only ones who have had their repayments slashed due to a series of rate cuts. They are certainly one of the more lucky ones though, since even with reduced cuts, many other borrowers still have to spend hundreds of pounds a month to pay off the capital on their homes.
The Bank of England has been cutting rates in order to stimulate lending. Since October last year interest rates have been reduced six times.
Mr Cameron, 37, an estate agent, said they decided to use the money they have saved to put more equity into their home when their mortgage deal comes up. The couple were paying a 20 per cent deposit on the ?400,000 property.
Mr Cameron has said they feel lucky: ?We feel incredibly lucky, we almost didn’t go for it. We look at our mortgage statements now and they look ridiculous, it’s fantastic.”
Tracker deals that are tied below the base rate are starting to be withdrawn by lenders. Currently the most attractive tracker mortgage is 2.39 per cent above the Bank?s rate.
