Lloyds TSB SVR structure change 'is understandable'

Date:Thursday 3rd June 2010
Author: Max Freedman

The decision by Lloyds TSB to alter the structure of their standard variable rate (SVR) mortgages is not unreasonable due to the funding conditions.

This is the opinion of Your Mortgage editor Paula John, who made her comments after the Lloyds Banking Group revealed that Lloyds TSB and Cheltenham & Gloucester's 2.5 per cent SVR mortgage is being dropped.

"Nobody ever assumed when these guarantees were made that the bank base rate would hit 0.5 per cent and that there would be a lot of pressure on mortgage lenders' funding prices themselves," she stated.

Ms John highlighted a similar case that occurred at Nationwide and suggested that it is understandable that institutions are having to raise prices, since the cost of funding loans has increased since the credit crunch began.

She pointed out that not all customers of the Lloyds Banking Group will be affected and the new loan being introduced in place of the 2.5 per cent SVR deal is about market average at 3.99 per cent.