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Lloyds hikes SVR and scraps ceiling for new borrowers

Lloyds Banking Group has hiked the standard variable rate for new Lloyds TSB and Cheltenham & Gloucester borrowers and is no longer offering new customers the guarantee that its reversionary rate will never be more than 2 per cent over base rate.

The rate will increase to 3.99 per cent from June 1 and applies to new borrowers. Lloyds also now has the ability to vary the rate at which the SVR tracks base rate movements. However, existing customers will remain on the existing 2.5 per cent capped SVR.

Last week Nationwide revealed that its decision to stick with its pledge to existing borrowers to cap its SVR had cost the building society more than £450m over the past year.

Lloyds Banking Group commercial director of mortgages Stephen Noakes says: “The new rate balances the needs of our customers with the commercial needs of the business. In the light of market conditions, particularly ongoing higher funding costs, we have introduced this new rate for new mortgages only.

“No customers will revert to the new rate until June 2012 at the earliest. The Homeowner Variable Rate is priced very competitively and below the average of other major lenders. It means that we can continue to offer a wide range of competitive and innovative products.”

Simplicity Financial Services principal Rob Downham says: “I do not blame them. What amazes me is that all these lenders had caps in the first place and none of them foresaw that base rate could drop so low.”

Last week Lloyds capped the amount that can be borrowed on an interest-only basis at £500,000 and said it will no longer permit the sale of a main residence, the sale of a business or an inheritance as repayment vehicles on interest-only mortgages.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Is it any wonder nobody trusts banks.

    “Yes Mr Governement, we will guarnatee our mortgage rate will remain low at 2% over base.”

    We have now had our cash, are back making a huge profit, so stuff or customers and the government, we are a bank and we can do what we want.

    TCF – they are having a laugh.

  2. Kevin Grannersby 1st June 2010 at 9:07 am

    @sandyb – did you even take the time to read the article before going off on one?

    This move is for new customers and does not affect those already on the deal. How does a 3.99% SVR stack up against others out there? And what does TCF have to do with product pricing?

  3. This makes sense- it’s not going to benefit them for a few years so it’s longer term planning and learning from their mistakes; if Bank rate drops again in a few years the lenders that haven’t made this change are going to look quite daft. Best for consumers that it is on the reversion rate that borrowers can get out of with no ERCs.
    A worthwhile price to mitigate the risk of lenders needing a bail out next time.

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