Lloyds TSB and its mortgage lending arm Cheltenham & Gloucester have promised to pass on any cut in the Bank of England base rate to their existing variable and tracker customers.
If the Bank of England decides to reduce interest rates further tomorrow, the lender has pledged to automatically cut its standard variable mortgage rate by the same amount on 1 March.
All new fixed and tracker products will also be reviewed, with new tracker products already having been temporarily withdrawn from the market as a result.
As the lender does not have a collar on its tracker products, its rates have the potential to go as low as 0% if base rate continues to fall. However, any customer whose product rate falls to zero will temporarily be charged a nominal rate of 0.001%.
Any interest payments made at this rate will be treated as overpayments, with customers being able to request a refund once the firm has been able to update its systems if they wish to.
"With many homeowners benefiting from monthly mortgage savings we have seen thousands of customers opting to overpay," said Stephen Noakes, C&G marketing director. "If base rate is cut again on Thursday we expect to see this trend continue. With house prices falling overpayment is a wise decision, as not only will it reduce the term or your loan, but it can also help protect the equity in your home."
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