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Lloyds TSB and Woolwich raise tracker mortgage rates

16 October 2008 / by Rachel Mason
Despite a Bank of England base rate cut last week of 0.5 per cent, Lloyds TSB and the Woolwich have announced increases in their tracker mortgage rates.

Both lenders have blamed recent rate increases made by competitors and the fact that the Libor – the inter-bank lending rate -has again failed to reflect the recent cut in interest rates – it stands at 6.21 per cent, well above the base rate of 4.5 per cent.

Lloyds TSB mortgages is putting up the cost of its tracker deals by between 0.3 per cent and 0.5 per cent, while the Woolwich's lifetime and offset tracker mortgage rates are both being increased by 0.2 per cent.

Woolwich mortgages was one of the lenders that actually cut its rates in response to the base rate cut, and says it is now having to put them up again because it says the cut is unsustainable.

Lloyds, however, never passed on the cut, so the difference between the cost of its deals and the base rate is now as much as 1 per cent in on some mortgages.

Andy Gray, head of mortgages at the Woolwich told the Press Association: "We are seeing unsustainable flows of customers to the Woolwich since changes by other lenders left us with some of the only competitively priced mortgages in the market.

"Last week we immediately passed on the full Bank of England base rate cut of 0.5%, but as a result of changes elsewhere in the market we now need to control the flow of business by making some slight increases to the rates on our tracker mortgages," he said.

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