Halifax scraps mortgage rate after ombudsman ruling

Britain's biggest mortgage lender today withdrew one of its most competitive rates after an ombudsman ruled it was confusing for consumers.

Halifax announced it would stop offering its new variable rate, which at 5% is one of the best deals on the market, from February 1.

Instead, its old variable rate of 5.75%, which many existing borrowers pay, will be the only standard variable rate it offers.

But the group said it would be launching a new tracker mortgage, which would not be more than 1% above the Bank of England base rate, giving a current rate of 5%.

The move comes after the financial ombudsman service upheld a complaint by Christopher Wright and his wife, who wanted to move their capped rate mortgage to the lender's new variable rate but were told they could not.

The confusion arose after Halifax moved more than 300,000 customers paying its old rate on to the new one.

But because Mr and Mrs Wright had a capped rate mortgage, which is treated as a special rate, they were not able to transfer it.

However, today the ombudsman ruled that Halifax's policy was confusing, and where a policy is ambiguous consumers should be given the benefit of the doubt, and he said the couple should be allowed to move to the new rate.

Halifax said that while the ombudsman did not rule that it was unfair to have two standard rates, in a bid to avoid any confusion it had decided to stop offering its new rate.

Head of mortgages Phil Jenks said: "Our strategy remains the same. The Halifax will continue to drive down the differential between new and existing customers because it is right for the customer and right for our business."

He added that the ombudsman's decision was specific to the Wrights, and any other complaints would be treated on an individual basis.

The bank said customers currently on the new standard rate would remain on it, but new borrowers would be offered one of its new products.