The couple's mortgage which went from £1,500 a month to ONE PENCE

Published 23rd Mar 2009

A couple have seen their mortgage payments plunge £1,500 a month to just 1p thanks to the huge cuts in interest rates, it emerged today.


Ben and Nicola Cameron signed a two-year tracker deal at 1.01 per cent below the base rate when they bought their London home in 2007 for just over £400,000.

They only pay interest on the loan from Cheltenham & Gloucester so have been paying nothing since February when interest rates were slashed to one per cent.

The Bank of England has since cut them again, down to another historic low of 0.5 per cent.

It is only down to a computer glitch that the couple are paying anything at all, according to the London Evening Standard.

Mr Cameron, 37, whose 28-year-old wife is due to give birth to their first child in June, said: 'We feel incredibly lucky - we almost didn't go for it.

'It was only the third broker we approached who flagged up this deal. We look at our mortgage statements now and they look ridiculous, it's fantastic.'

A handful of lenders, including Halifax, offered two-year trackers at between 0.51 and 1.01 per cent below the base rate in the last half of 2007.

An estimated 30,000 more homeowners are believed to be on zero interest loans but are on repayment schemes so are still paying lenders hundreds of pounds a month in paying off the capital.

'That's why we're paying one pence,' said Mr Cameron, an estate agent. 'Cheltenham & Gloucester sent us a letter saying their admin system couldn't cope and they'd charge us a nominal rate of 0.001 per cent, then refund us.

'We pay them 24p and they pay us back 23p - it seems very silly.'

The Camerons, who bought the two-bedroom Victorian home in Hampton in Richmond borough with a 20 per cent deposit, have not spent their saved cash.

'We're saving what we were paying when the interest rate was 5.5 per cent,' Mr Cameron said.

'It has been tempting to blow the extra money on a holiday, but it seemed irresponsible when we're about to become parents and we may be in negative equity because our house has fallen in value.'

They will have to move to their lender's standard variable rate at the end of the year. Mr Cameron said: 'It's a huge relief to know we can use the money we've saved to put equity back into our home so we can hopefully get a good fixed rate deal.'

The most attractive tracker mortgage now on the market is a life-time rate of 2.39 per cent above the base rate from First Direct, available with a 25 per cent deposit.

Source: ' Daily Mail '

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