Lloyds Banking Group has buckled under the pressure of low interest rates and introduced a higher SVR for new Cheltenham & Gloucester borrowers.
The lender has introduced a 3.99% home owner variable rate for new Lloyds TSB and C&G mort-gages. Existing mortgage holders will remain on the old SVR of 2.5%. The new rate does not have a cap, nor is it directly linked to the Bank of England base rate.
Stephen Noakes, commercial director of mortgages at the group, says: “In light of market conditions – the ongoing high cost of funds in particular – we have introduced a higher rate for new mortgage customers only.”
David Hollingworth, mortgage specialist at London & Country, says: “This is another sign that the base rate is too low for lenders and they are having to take action.”
The Lloyds group move came as Alliance & Leicester lowered its SVR from 4.99% to 4.24% for new customers, bringing it in line with Santander’s SVR.
Last week also saw Northern Rock tighten its interest-only criteria. It will no longer accept inheritance, bonuses, dividends, regular overpayments or an intention to convert to repayments at a future date as valid repayment vehicles.
In addition, the acceptance of a sale of the property as a repayment vehicle will be limited to cases with a maximum LTV of 60% and minimum equity of £150,000.
Earlier in the month, Lloyds group also tightened its interest-only criteria.
It will no longer offer interest-only deals to customers borrowing more than £500,000.