From This is Money:
Mortgage lenders widely offered tracker mortgages of 0.5% or more below bank rate until around 18 months ago and today’s cut to the bank rate to 1% has left at least one now straying into negative territory.
Cheltenham & Gloucester offered a tracker mortgage at bank rate minus 1.01% in the summer of 2007, leaving its borrowers with an interest rate of less than zero after the Bank of England cut rates to 1% today.
Meanwhile, thousands of borrowers who opted for low rate trackers will now be paying 0.5% interest or less.
– Blog: Is this the cheapest mortgage ever?
Mortgage lenders have confirmed that if their tracker rates fall into negative territory they will not pay out money to customers. But those who have seen rates track to below 0% should ultimately end up paying no interest.
C&G says its systems cannot deal with zero or negative rates and 0.001% will be charged ‘until the computer systems can be adjusted’.
This gives an interest payment of 8p per month…