04 February 2009 / by Rebecca Sargent
As the Bank of England’s Monetary Policy Committee prepares to make a decision on the base rate tomorrow, Lloyds TSB and its mortgage arm Cheltenham & Gloucester have vowed to pass on any cut in the base rate to their mortgage customers.
The mortgage lender has said that if the rate is cut, then its standard variable mortgage rate will automatically reflect the drop on March 1. Existing Lloyds TSB customers on tracker mortgages will also benefit from any cut from March 1.
And because there is no collar in place, the rate on the Lloyds TSB tracker mortgages could fall as low as zero if the base rate continues to fall.
Since December 2007, interest rates have been cut by 4.25 per cent, all of which has been reflected in Lloyds TSB’s standard variable rate. On a typical repayment mortgage of £150,000 this means a monthly saving of more than £380.
Commenting, Stephen Noakes, C&G; marketing director said: “With homeowners benefitting from monthly mortgage savings we have seen thousands of customers opting to overpay.
“If base rate is cut again on Thursday we expect to see this trend continue. With house prices falling overpayment is a wise decision, as not only will it reduce the term or your loan, but it can also help protect the equity in your home.”
If interest rates are cut, Lloyds TSB will review its tracker and fixed rate mortgage range, and is temporarily withdrawing its tracker range from the end of business today.
“We will look to introduce our new tracker and fixed rates as soon as we can see the effect of Thursday’s decision on the wholesale funding markets. If there is an opportunity to make savings on funding this will be reflected in our new rates,” Mr Noakes added.
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