In news this week, the Lloyds Group has increased its SVR (standard variable rate) for all new mortgages at Cheltenham & Gloucester and Lloyds TSB. The changes also mean that new borrowers will not have the guarantee that the bank’s rate will not rise more than 2% over the current base interest rate.
This change comes into effect from the 1st June and will start at 3.99% for all new mortgages. To avoid any confusion with their old SVR for current borrowers, currently 2.5%, the new rate will be called ‘the homeowner variable rate’. With this homeowner variable rate, Lloyds will also be able to vary the rate at which is tracks the base interest rate when it moves.
Stephen Noakes, the Lloyds Banking Group Commercial Director of Mortgages, commented:
“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 rate for new mortgages only.”
The move is perhaps unsurprising as many mortgage lenders had not foreseen that the base rate could drop as low as it has done however, many borrowers may feel uncomfortable at the news.
In other recent news, mortgage lender Nationwide stated that its earlier decision to stick to its promise of the cap on its SVR for existing borrowers has cost it over £450 million in the last twelve months.