Halifax forced to compensate 250,000 mortgage borrowers

Hundreds of thousands of Halifax customers could receive payments of up to £4,500 after the bank said more people might have been misinformed about changes to mortgage rates than it had originally thought.

In February, the bank said it would write to 600,000 borrowers to explain that they might be eligible for compensation if they had not been told of a change in the way their mortgage rate was calculated, according to the Telegraph.

Halifax said it has now identified a further 250,000 customers who may have been affected.

About half of the original group received compensation of either a flat amount or 1% of their mortgage balance for each year they were affected.

A Halifax spokesman said a similar proportion of the new group was likely to receive a payment.

On a typical mortgage of £150,000, a borrower could be due a repayment of £4,500, assuming they had been unaware of the problem for three years.

The problem arose when Halifax decided to change the maximum level of its standard variable rate (SVR).

The SVR cap, previously 2 percentage points above Bank Rate, would be increased to 3 percentage points - potentially adding hundreds of pounds to borrowers' annual interest bills.

The Financial Services Authority was concerned that some borrowers might have been misled by the wording of their offer document into believing that Halifax would tell them about any such change.

A spokesman for Halifax said: "In February 2011, we agreed a voluntary agreement with the FSA in relation to a customer contact and goodwill payment programme with specific Halifax mortgage customers.

"We have subsequently identified a further group of customers that are eligible for inclusion within the programme. We are now in the process of writing to these borrowers explaining what this means for them."