SVR increased by Lloyds TSB

Not so long time ago, when a borrower reached the end of their home owner mortgage deal, they chose a new lender and got another cheap loan deal through remortgaging.

However, interest rates and lenders’ standard variable rates are particularly low on the market now. Besides, many new home owner loan deals are too expensive. Naturally, many consumers become more inclined to stay loyal to their current loan provider’s standard variable rate, because it turns out more financially reasonable than switching to a new loan deal.

Lloyds TSB has just let it be known that it is going to increase its standard variable rate for new borrowers (only with effect from the 1st of June) to 3.9%.
The bank had previously pledged that it will never increase its SVR on loans to more than 2% above the  Bank of England base rate and this will still be the case for consumers who already have their loan with the bank, which means that their interest rate will change to 2.5% when their existing deal comes to an end, on the assumption that the base rate does not increase.

Since the new SVR from Lloyds TSB is not fixed to the Bank of England base rate, it could be changed at any time. However, a rate of 3.99% is still competitive, with the average SVR being 4.73%.

Michelle Slade of Moneyfacts.co.uk commented that Lloyds TSB had promised not to increase its SVR because it hadn’t expected base rate to become so low. The loan provider has seen its balance sheet dented by customers returning to the record low rate of 2.5%. A great number of its customers are deciding to stick to the current deal and overpay their mortgage instead of remortgaging at a higher rate of interest.
 


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