Lloyds TSB and Woolwich up tracker rates

Two High Street mortgage lenders have increased their tracker rates, despite last week’s 0.5% cut in the base rate.

Lloyds TSB is hiking its mainstream tracker rates by between 0.3% and 0.5% and Woolwich, the mortgage lending unit of Barclays, is increasing rates on its lifetime and offset tracker deals by 0.2%.

Woolwich actually reduced some rates last week on news of the 0.5% fall in the base rate, to 4.5%.

However, the lender now says that recent changes in the market mean its mortgages are so competitive that demand has become too high.

Libor rates, the rates at which banks lend to one another, have eased back slightly this week but three month Libor, a rate crucial to the UK mortgage market, was still well above the base rate on Tuesday, at 6.21%.

This indicates that banks remain reluctant to lend to one another, despite the Government’s rescue of RBS and Lloyds / HBOS

Tracker mortgages charge a fixed percentage above the Bank of England’s base rate and according to online mortgage broker, mform, the average cost of a tracker has increased from 0.3% above base rate to over 1.6% above base rate, in the past 12 months.

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