A new Homeowner Variable Rate is being introduced for new Lloyds TSB and Cheltenham & Gloucester mortgages from 1 June 2010.
No existing mortgages are affected by the introduction of this rate, they will remain on the existing Standard Variable Mortgage Rate which is currently 2.50%.
The Homeowner Variable Rate of 3.99% will apply to new Lloyds TSB and Cheltenham & Gloucester mortgages from 1 June.
The rate does not have a cap nor is it directly linked to Bank of England base rate.
When new mortgages revert to the new Homeowner Variable Rate at the end of the initial product period, in June 2012 at the earliest, customers can switch to a new product without paying an early repayment charge.
Any customer taking out a further advance or product transfer will do so under the new Homeowner Variable Rate policy.
The new rate will then only apply to the amount being transferred or the additional amount being borrowed.
Lloyds says the new policy is being implemented in the light of market conditions and balances the interests of customers with the commercial imperative of managing the business in a sustainable and prudent fashion.
It says the new rate enables the Group to continue to offer a competitive and innovative range of products across Lloyds TSB and Cheltenham & Gloucester.
The new rate does not apply to any of the other mortgage brands within Lloyds Banking Group, including Halifax.
Stephen Noakes, commercial director of mortgages, Lloyds Banking Group, 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.”
Source: Moneyfacts (26.05.10)