C&G withdraws tracker loans in response to base rate cut

Cheltenham & Gloucester (C&G), the mortgage lending arm of Lloyds TSB, has withdrawn some of its most competitive mortgage deals, from today.

The move follows yesterday’s emergency cut in the Bank of England’s base rate, to 4.5%, which prompted leading lenders, including Halifax and C&G, to cut their standard variable rates (SVR).

However, C&G has now withdrawn a number of home loans that track its SVR, and other lenders are expected to follow suit.

Only around one-third of the UK’s 11.7 million households with mortgages are expected to benefit from the cut in the base rate, as the majority are tied into fixed-rate deals.

Borrowers on existing tracker deals or paying their lenders’ standard variable rates (SVR) should see a reduction in repayments in November, saving around £40 a month on a £150,000 loan.

The early response from C&G indicates that the impact of the base rate reduction on the overall UK mortgage market could be very limited.

The majority of the UK’s mortgage lenders fund their business by borrowing on the wholesale money markets and it is Libor, the interbank lending rate, rather than the base rate that plays a major role in determining the cost of home loans.

Products withdrawn by C&G are as follows: two-year tracker 90% loan-to-value (LTV) 6.29% (+1.29) £995 fee; two-year tracker 90% LTV 6.79% (+1.79) no fee; full term tracker 90% 6.35% (+1.35) £995 fee; full term tracker 90% LTV 6.75% (+1.75) no fee; full term tracker 90% 6.99% (+1.99) £995 fee, no early repayment charge.

Discuss this in the Finance Markets forums

Story link: C&G withdraws tracker loans in response to base rate cut