Northern Rock in mortgage deal with Lloyds TSB

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A new deal has been reached between Northern Rock and Lloyds TSB, whereby Lloyds TSB will offer mortgages to Northern Rock customers when their deal with the lender expires.

Lloyds will cherry-pick Northern Rock customers and send them letters when their current fixed-rate term is nearing the expiry date. The bank said the standard application fee will be waived.

Ron Sandler, who was appointed by the Government to revive Northern Rock, has made it clear that the bank’s aim is shrink the size of its loan book.

The crisis-torn bank recently set mortgage rates at uncompetitive levels, in a conscious effort to drive away new business.

The agreement will commence next month and it has been determined that Lloyds TSB will pay a commission to Northern Rock for each customer who switches to it.

Those who do not want a Lloyds TSB mortgage will have the option of staying with Northern Rock on a higher interest rate, or switching to another lender.

Commenting on the new deal, Mr Sandler said it gives some of our customers an additional option to consider when seeking to transfer to another lender and, under this arrangement, they will be able to do so in a smooth and simple manner, using our dedicated mortgage review service.

Helen Weir, head of UK retail banking at Lloyds TSB, said the transaction is great news for all parties involved and is an innovative example of how we continue to deliver on our organic growth strategy and maintain the high quality of our mortgage book.

Newcastle-based Northern Rock was taken into public ownership after the Government rejected takeover bids from the board of Northern Rock and a consortium led by Sir Richard Branson’s Virgin Group.

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