Halifax loses dual rate fight

HALIFAX, the UK‘s largest mortgage lender, has lost its appeal against the Financial Ombudsman's ruling that its dual mortgage rates are unfair.

The bank introduced a lower base mortgage rate on 1 March 2001 but kept its higher standard variable rate – thus creating a dual system. This sparked controversy because most existing borrowers, including those with discounted or capped mortgage rates, continued to have their payments based on the higher SVR. New customers, however, were put straight on to the new, lower rate.

Halifax customer Chris Wright took the bank to the Ombudsman over this practice and the regulator ruled in his favour.

Halifax, which has over one million borrowers on the higher SVR or with discounted or capped deals linked to the rate, has said that in response to the Ombudsman‘s decision it will remove its new variable rate of 5% with effect from 1 February. All customers will now pay the old variable rate – currently 5.75% - and this will be the Halifax‘s sole benchmark SVR.

Halifax, which says the Ombudsman ruling only applies to a specific case, will not be automatically compensating other customers who have been paying the old SVR since 1 March.

However, it says it will deal with cases on an individual basis if and when they approach the lender.

Nationwide also introduced a dual mortgage rate system in March last year. It has not yet said how it expects to respond to the Ombudsman final ruling today.

If you are a Nationwide or Halifax customer – stuck on its higher standard variable rate – then you could have a claim for comensation. Email us here and let us know your situation.

Nationwide fined over dual rates

Mortgage lenders in the dock