Lloyds TSB interest-only mortgage deals axed

Date:Wednesday 29th October 2008

Lloyds TSB mortgage deals that enabled borrowers to switch from repayment mortgages to interest-only ones are being axed, it has been revealed.

The Times reported that the lender has been criticised for stopping the options, which are often needed by struggling borrowers who require lower monthly repayments.

Lenders can allow customers to go from repayment loans to interest-only deals, which can save hundreds of pounds a month.

It is an option that could help borrowers to escape repossession.

Cheltenham & Gloucester, Lloyds TSB's mortgage arm, brought in the new rule as part of a number of new, stricter lending criteria.

Frances Walker of the Consumer Credit Counselling Service told the paper that the policy was a let-down.

The Intermediary Mortgage Lenders Association says that lending standards in the UK have been "more rigorous" than in the US.

It blamed the recent rise in repossessions on a "worsening credit environment rather than poor lending".