Nationwide will not pass on any further cuts to the Bank of England base rate to customers with tracker mortgages, The Times has learnt.
The lender plans to invoke a rule in its mortgage contracts allowing it to freeze tracker rates when the base rate falls below 2 per cent, affecting more than 200,000 customers.
Its decision sets the Nationwide on a collision course with the Government. Last night a Treasury aide reiterated Alistair Darling's view. 'The Chancellor has repeatedly made clear that he expects lenders to do their best to help their customers through these difficult times,' the aide said.
About 4.2 million borrowers on tracker deals, which are pegged to the base rate, have benefited from a series of cuts by the Bank of England.
The Times, Daily Telegraph