Nearly 100,000 Northern Rock borrowers will not see their standard variable rate drop because the lender’s parent company will not pass on the recent Bank of England base rate cut.
The Times reports that US private equity firm Cerberus Capital Management will not drop its SVR by 0.25 per cent, as many other lenders have done.
Cerberus bought £13bn of Northern Rock loans from Government agency UK Asset Resolution last November, before selling £3.3bn of those assets to TSB.
However, TSB has opted to pass on the rate cut. UKAR has also passed on the cut to the rump of its Northern Rock and Bradford & Bingley loan books.
When UKAR sold the loans to Cerberus it said that a condition of the deal was “the continued fair treatment of customers”.
UKAR prevented Cerberus from raising rates for a year from the deal date but did not anticipate a base rate drop.
Think tank New City Agenda founder and former Treasury select committee chairman Lord McFall says: “UKAR’s failure to put in place adequate protection has left former Northern Rock customers facing a lottery as to whether they benefit from the Bank of England’s rate cut.”