Are you owed a Halifax mortgage refund?
Halifax is to give goodwill payments to thousands of customers after admitting "confusing" them over mortgage payments.
The cap only applies to borrowers who are paying the SVR and have an early repayment charge. However, this was not made clear in paperwork provided with mortgages given between September 2004 and September 2007.
The bank informed those customers that were covered by the cap about the changes. But many customers wrongly believed they were also covered by the cap as a result of the paperwork they received.
Now the bank admits it was not clear enough with its customers and has struck a deal with the Financial Services Authority, promising to "review and redress" the situation.
Customers who were covered by the cap will receive £250 while those who weren't but thought they were will receive a discretionary payment.
"Many Halifax customers will have missed out on cheaper mortgage payments because Halifax changed its SVR cap when interest rates fell to historic lows," says Melanie Bien, director of independent mortgage broker Private Finance.
"While Halifax reserved the right to make this adjustment in its terms and conditions, the fact that many borrowers were not aware of it because it wasn't in the offer documentation they received, leaves Halifax on shaky ground.
She adds: "Borrowers may have chosen a different mortgage at the time if they had known, so Halifax must now compensate them accordingly."
Halifax is set to contact any customers who were affected by the rate increase without warning.
Let us know if you’ve been affected by Halifax's blunder below
Every mortgage lender has a standard variable rate of interest, or SVR, on which it bases all its mortgage deals, including fixed and discounted rate and tracker mortgages. When special deals come to an end, the terms of the deal usually state that the borrower has to pay the lender’s SVR for a period of time or pay redemption penalties. The lender’s SVR is, in turn, based on the Bank of England’s base lending rate decided by the Bank’s Monetary Policy Committee (MPC). Every time the MPC raises its rate, mortgage lenders generally increase their SVR by the same amount but when the MPC lowers its rate, lenders are often slow to pass this on or don’t pass on the full cut to borrowers.
Also referred to as the bank rate or the minimum lending rate, the Bank of England base rate is the lowest rate the Bank uses to discount bills of exchange. This affects consumers as it is used by mainstream lenders and banks as the basis for calculating interest rates on mortgages, loans and savings.