Britain's biggest building society, Nationwide, has confirmed that it will not pass on any further interest rate cuts to most of its tracker mortgage customers.
The lender plans to invoke a clause in the deals which enables it to stop reducing the loans in line with cuts to the Bank of England base rate once official interest rates fall below 2%, which is the current level.
It said the move, which will affect more than 250,000 customers, was to protect its savers from further aggressive rate cuts.
The so-called 'collar' on the majority of the group's mortgages was supposed to kick in when the base rate fell below 2.75%. But Nationwide decided to waive the clause last month, passing on December's one-point reduction in full.
Spokesmen for both Permanent TSB and the EBS Building Society have said they have no similar clause which would allow them to withhold the benefit of further ECB interest rate cuts from holders of tracker mortgages.
Bank of Ireland also said it would continue to pass along any cuts to tracker mortgage customers.
'There are no clauses in our tracker mortgage contracts which would prevent us from passing on future ECB rate cuts,' a Bank of Ireland spokeswoman said.
But Bank of Ireland's tracker mortgage contract has small print that refers to a funding cost. The terms and conditions state that the rate charged shall never fall below 0.1% above one month Euribor - that's the interbank lending rate over a loan term of one month.
But the bank says it has never enforced this clause and has no plans to do so.
Meanwhile a Nationwide spokeswoman said: 'Savings rates are at an historic low and this move means we will not be forced into a position where we could have to cut savings rates more aggressively than we would otherwise like to.'
But the decision to invoke the collar on its tracker mortgages is likely to anger the British government, which has called on banks and building societies to pass on base rate reductions to their customers.
The Bank of England's Monetary Policy Committee will hold its next interest rate setting meeting next week, when it is widely expected to slash rates by at least a further 0.5 points, with some economists pencilling in a 0.75% cut.
