divimg alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/89165?ns=guardianpageName=Money%3A+Tracker+warning+ahead+of+rate+decisionch=Moneyc3=guardian.co.ukc4=Mortgages+%28Money%29%2CProperty%2CBorrowing+and+debt%2CBanks+and+building+societies%2CMoney%2CHousing+market+%28Business%29%2CBusiness%2CUK+news%2CInterest+rates+%28Money%29%2CInterest+rates+%28Business%29c5=Personal+Finance%2CInvestments%2CCredit+Crunch%2CNot+commercially+useful%2CBusiness+Markets%2CProperty+Mortgages+and+Interest+Ratesc6=Staff+and+agenciesc7=2008_12_03c8=1128025c9=articlec10=GUc11=Moneyc12=Mortgagesc13=c14=h2=GU%2FMoney%2FMortgages" width="1" height="1" //divpAt least half a million tracker a href="http://www.guardian.co.uk/money/mortgages"mortgage/a customers may not see their repayments fall in line with this week's expected a href="http://www.guardian.co.uk/money/interestrates"interest rate/a cut, it was predicted today./ppThat figure could more than double if the UK's largest lender, Halifax, implements a clause in its home loans allowing it to change borrowers' rates./ppThe Bank of England's monetary policy committee (MPC) is widely expected to reduce the base rate by between 0.5% and 1% when it announces the result of its two-day meeting tomorrow. But clauses in some tracker mortgages will mean lenders no longer have to pass on the cut to their customers, while those on standard variable rate (SVR) deals are also unlikely to benefit from the full reduction./ppDespite the fact that tracker deals automatically move up and down in line with the base rate, some have so-called floors or collars which state that lenders will stop passing on rate cuts once the base rate falls below a certain level./ppOn Nationwide deals a collar kicks in when a href="http://www.guardian.co.uk/money/2008/nov/01/mortgages-property"official interest rates fall below 2.75%/a, while on a Skipton or Yorkshire building society tracker the cut off point is 3%./ppRay Boulger, senior technical manager at mortgage broker John Charcol, said up to 1.2 million people - a sizeable proportion of the estimated 3.9 million who have tracker deals - may not see the full reduction passed on to them./ppHe said up to 600,000 people had tracker mortgages with lenders such as Nationwide and Skipton, while up to a further 600,000 have a tracker deal with Halifax, which may choose to exercise its option not to pass on the rate cut in full./ph2Halifax/h2pThe small print in Halifax's mortgage gives it the option not to pass on all or any cut once the base rate falls below 3%. It tells customers: "We can also change the tracker margin to your disadvantage, but only at a time when the tracker base rate is less than 3% per year. /pp"By 'to your disadvantage' we mean increasing the tracker margin where it is positive or zero, reducing the tracker margin where it is negative, or changing a negative tracker margin to a positive one." /ppHowever, comments made yesterday by a representative of the City watchdog, the Financial Services Authority (FSA), suggest the bank could be in trouble if it a href="http://www.guardian.co.uk/money/2008/dec/02/mortgages-banks"tries to implement the clause/a./ppJon Pain, the FSA's retail markets managing director, told the Council of Mortgage Lenders annual conference that while tracker interest rate collars could be a legitimate term of a mortgage, "it can only be if it is clear and unambiguous to the consumer, and is consistently and prominently spelt out in the initial KFI [key facts illustration] and offer document throughout the sales process"./ppA spokesman for the FSA said it would not comment on individual companies, but it seems likely Halifax will be under pressure to pass on any reduction in full. /ppIf it doesn't, Boulger said it could face a legal challenge from borrowers. "I had a call last week from one borrower with a large Halifax lifetime tracker mortgage who said he would do just that," he said./ph2Standard variable rates/h2pBorrowers on SVRs are also unlikely to benefit from the full reduction. Lloyds TSB, which also lends under the Cheltenham Gloucester brand, is the only major lender which links its SVR to the Bank base rate. /ppIts terms and conditions pledge that its SVR will never be more than 2% above the base rate, which means it could fall as low as 4% if the MPC does opt for a full 1% cut./ppLast month, a number of major lenders were quick to reduce their SVR by the full 1.5% after coming under pressure from the government, but many others only passed on smaller cuts./ppOverall, 87 out of 95 lenders with an SVR passed on some of the reduction, but 57 did not pass it on in full, with some only reducing their rates by 0.25%. The Woolwich, Barclays' lending arm, has not passed on anything./ppLouise Cuming, head of mortgages at moneysupermarket.com, said: "If we see a 1% cut to [an overall rate of] 2%, it will be very, very difficult for lenders to pass that on./pp"They have to have an eye on profitability and 2008 has been about lenders wanting to get profit rather than volume lending."/ppBoulger agreed, saying that if rates were cut by 1% he would expect lenders to pass on between 0.25% to 0.5% to SVR customers, unless the government puts pressure on the major lenders to pass on the cut in full again./ppIf the MPC cuts interest rates by 0.5% and lenders pass on the reduction in full it would save borrowers with a typical £150,000 mortgage around £43 a month, while a 1% reduction would reduce monthly repayments by £85./pdiv style="float: left; margin-right: 10px; margin-bottom: 10px;"ullia href="http://www.guardian.co.uk/money/mortgages"Mortgages/a/lilia href="http://www.guardian.co.uk/money/property"Property/a/lilia href="http://www.guardian.co.uk/money/debt"Borrowing debt/a/lilia href="http://www.guardian.co.uk/money/banks"Banks and building societies/a/lilia href="http://www.guardian.co.uk/business/housingmarket"Housing market/a/lilia href="http://www.guardian.co.uk/money/interestrates"Interest rates/a/lilia href="http://www.guardian.co.uk/business/interestrates"Interest rates/a/li/ul/diva href="http://www.guardian.co.uk"guardian.co.uk/a copy; Guardian News Media Limited 2008 | Use of this content is subject to our a href="http://users.guardian.co.uk/help/article/0,,933909,00.html"Terms Conditions/a | a href="http://www.guardian.co.uk/webfeeds/1,,1309488,00.html"More Feeds/a pa href="http://feedads.googleadservices.com/~at/vFowmOJr7LLH_KbczF13xURKTeE/a"img src="http://feedads.googleadservices.com/~at/vFowmOJr7LLH_KbczF13xURKTeE/i" border="0" ismap="true"/img/a/p

divimg alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/85004?ns=guardianpageName=Money%3A+Mortgage+market+will+%27grind+to+a+halt%27ch=Moneyc3=guardian.co.ukc4=Mortgages+%28Money%29%2CProperty%2CMoney%2CHousing+market+%28Business%29%2CBusiness%2CUK+newsc5=Personal+Finance%2CCredit+Crunch%2CNot+commercially+useful%2CBusiness+Markets%2CProperty+Mortgages+and+Interest+Ratesc6=Jill+Treanorc7=2008_12_02c8=1127595c9=articlec10=GUc11=Moneyc12=Mortgagesc13=c14=h2=GU%2FMoney%2FMortgages" width="1" height="1" //divpThe mortgage market will come to a standstill next year unless the government takes further action to help banks and building societies, the Council of Mortgage Lenders (CML) said today./ppDirector general, Michael Coogan, raised the prospect of "mortgage rationing" as he admitted the government's demand for mortgage lending to return to 2007 levels could not be achieved./ppHis warning echoed last week's prediction by the government's mortgage tsar, Sir James Crosby, that 2009 could see a href="http://www.guardian.co.uk/money/2008/nov/25/mortgages-property"negative net lending for the first time/a as more home loans are paid off than new ones are granted./ppAddressing this year's CML conference, Coogan called on the government to take further steps to make life easier for mortgage lenders, including cutting the cost to the banking industry of funding the Financial Services Compensation Scheme (FSCS). /ppThe scheme is currently paying out depositors in Bradford Bingley, the collapsed Icelandic banks and London Scottish Bank, and Coogan said the contributions demanded by the government could amount to 20%-30% of the industry profits next year./pp"Unless government takes further targeted action to help market participants, we will see a worsening of the picture next year compared to this. I would therefore not disagree today with Sir James Crosby's analysis or prognosis in his report," Coogan told delegates./pp"A good outcome next year in my view would be if had lending at levels seen in 2008, but bearing in mind we will be in a recession ... this would be a real challenge."br / br /Jon Pain, the retail markets managing director at the Financial Services Authority (FSA), agreed with the predictions for negative net lending./ppBut while some areas of the mortgage market had dried up, Pain said the regulator wanted to "encourage growth in mortgage lending that properly reflects the price of risk"./ppThe CML has forecast that net lending this year will be half the record £108bn reached last year. However, the government has set this figure as a target for the banks accepting its £37bn bail-out./ppCoogan set out a number of steps the government, the Bank of England and the FSA should take rejuvinate lending. These included calling a halt to demanding that lenders pass on base rate cuts because of the impact this has on savings rates, and allowing income support for mortgage interest payments to be paid when one borrower's income is reduced, not just an entire household's./ppHe also said specialist lenders should be allowed to use the special liquidity scheme which banks and building societies can use to swap mortgage bonds for higher rated government paper, and that the terms of the £37bn recapitalisation measures should be reviewed./pdiv style="float: left; margin-right: 10px; margin-bottom: 10px;"ullia href="http://www.guardian.co.uk/money/mortgages"Mortgages/a/lilia href="http://www.guardian.co.uk/money/property"Property/a/lilia href="http://www.guardian.co.uk/business/housingmarket"Housing market/a/li/ul/diva href="http://www.guardian.co.uk"guardian.co.uk/a copy; Guardian News Media Limited 2008 | Use of this content is subject to our a href="http://users.guardian.co.uk/help/article/0,,933909,00.html"Terms Conditions/a | a href="http://www.guardian.co.uk/webfeeds/1,,1309488,00.html"More Feeds/a pa href="http://feedads.googleadservices.com/~at/lTDDTAzgY42-IMViJADPHuF9eDg/a"img src="http://feedads.googleadservices.com/~at/lTDDTAzgY42-IMViJADPHuF9eDg/i" border="0" ismap="true"/img/a/p

Consumers will agree in advance how much they will pay for personal investment advice under plans to overhaul the UK retail investment market announced last week by the Financial Services Authority (FSA).

divimg alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/54267?ns=guardianpageName=Money%3A+FSA+warns+lenders+over+tracker+mortgagesch=Moneyc3=guardian.co.ukc4=Mortgages+%28Money%29%2CBanks+and+building+societies%2CMoney%2CInterest+rates+%28Money%29%2CBorrowing+and+debt%2CBusiness%2CUK+newsc5=Personal+Finance%2CInvestments%2CNot+commercially+useful%2CBusiness+Markets%2CProperty+Mortgages+and+Interest+Ratesc6=Rupert+Jonesc7=2008_12_02c8=1127448c9=articlec10=GUc11=Moneyc12=Mortgagesc13=c14=h2=GU%2FMoney%2FMortgages" width="1" height="1" //divpa href="http://www.guardian.co.uk/money/banks"Banks and building societies/a were today warned they could find themselves in hot water if they use small print terms to avoid passing on this week's likely a href="http://www.guardian.co.uk/money/interestrates"interest rate/a cut to their tracker mortgage customers./ppThe Financial Services Authority has waded into the row over the "collars" or "floors" that some mortgage lenders have in their terms and conditions, which allow them not to pass on rate cuts, even if the contract says the loan is tied to the Bank of England base rate./ppMany holders of tracker home loans are looking forward to another sizeable reduction in their monthly costs if the Bank cuts rates on Thursday. Some economists are predicting a cut of a full percentage point, which would take the main rate down to 2%./ppHowever, some lenders have small print in their contracts which allows them to set a minimum rate for customers. /ppNationwide building society has indicated that once the base rate hits 2.75% it will not pass on any further cuts to borrowers, while Halifax has an option not to pass on any cuts below 3%, but both would be under pressure to do so. The restriction means a borrower with a Nationwide mortgage tracking 0.5% above the base rate will never see their pay rate fall below 3.25%, even if interest rates continue to fall./ppSpeaking today at the Council of Mortgage Lenders annual conference, Jon Pain, the FSA's retail markets managing director, said that while tracker interest rate floors could be a legitimate term of a mortgage, "it can only be if it is clear and unambiguous to the consumer, and is consistently and prominently spelt out in the initial KFI [key facts illustration] and offer document throughout the sales process"./ppHe added: "If it is not [lenders] run the real risk of both breaching our disclosure requirements and having an unfair contract term you cannot enforce."/ppPain said he was well aware of the potential risks some lenders faced in a very low interest rate environment. "But the solution cannot be to introduce contract terms that don't exist or are unenforceable," he added./ppYesterday, Nationwide launched a tracker deal with a collar of 1%, allowing new borrowers to benefit from further rate cuts. However, the rate on the mortgage is pegged 1.99% above the base rate./pdiv style="float: left; margin-right: 10px; margin-bottom: 10px;"ullia href="http://www.guardian.co.uk/money/mortgages"Mortgages/a/lilia href="http://www.guardian.co.uk/money/banks"Banks and building societies/a/lilia href="http://www.guardian.co.uk/money/interestrates"Interest rates/a/lilia href="http://www.guardian.co.uk/money/debt"Borrowing debt/a/li/ul/diva href="http://www.guardian.co.uk"guardian.co.uk/a copy; Guardian News Media Limited 2008 | Use of this content is subject to our a href="http://users.guardian.co.uk/help/article/0,,933909,00.html"Terms Conditions/a | a href="http://www.guardian.co.uk/webfeeds/1,,1309488,00.html"More Feeds/a pa href="http://feedads.googleadservices.com/~at/KIMTpSpdHBoGS203wCyeliELdwo/a"img src="http://feedads.googleadservices.com/~at/KIMTpSpdHBoGS203wCyeliELdwo/i" border="0" ismap="true"/img/a/p