Lloyds TSB is to end the ‘2% plus base rate’ ceiling for its standard variable rate (SVR) for new customers from 1 June. Only new customers are affected. Existing SVR borrowers and those coming off fixed rate deals will stay at 2.5%.
The bank group is Britain’s biggest mortgage lender, with a market share of approximately 24%. It owns Halifax, Lloyds TSB, Bank of Scotland, Cheltenham & Gloucester and Birmingham Midshires.
New variable rate
Lloyds TSB and Cheltenham & Gloucester currently restrict their SVR to Bank of England base rate plus 2%. With base rate at an historic low of 0.5%, this means that the lenders’ SVR was 2.5%. From 1 June, their SVR will rise to 3.99% for new borrowers. Existing SVR borrowers or those transferring to SVR from a fixed-rate deal can stay on the old rate of 2.5%, however, unless they increase their mortgage- and even then the new rate will only apply to the extra borrowing.
A similar move was made by Skipton Building Society, which abandoned a 3.5% ceiling for its SVR in March. Its rise affected existing SVR borrowers, as well as those taking out a new mortgage.
Halifax SVR remains lower
Not all new mortgages with the Lloyds Bank group will have the same SVR. Halifax SVR mortgages will have a rate of 3.5%. The SVR charged by Bank of Scotland will be 4.84%.
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