03 December 2008
Cheltenham & Gloucester and its parent company, Lloyds TSB, have pledged to pass on any base rate cut in full to existing variable and tracker customers.
Should the Bank of England cut the base rate tomorrow Lloyds TSB Bank plc, who is the lender, will automatically cut its standard variable mortgage rate - currently at 5 per cent - by the same amount on 1 January. Because Lloyds TSB Bank plc has no floor on its tracker products, all existing tracker customers will also benefit from any rate cut in full from 1 January. (Some lenders' tracker rates have a floor which means they won't fall any further once the Bank of England base rate reaches a certain level, eg 3%.)
If base rates are cut, Lloyds TSB will also review all new fixed and tracker products before introducing lower-priced products as soon as possible. As part of this process, all new trackers will be temporarily withdrawn.
Stephen Noakes, C&G marketing director, said; “Whatever the size of the cut, if base rate comes down, we’ll pass the full benefit on to our existing customers. On top of November’s 1.5 percentage point reduction, this will come as a welcome bonus...
...as soon as we know the impact of the base rate decision on wholesale funding costs, we will launch our new fixed and tracker rates. If we can make a saving on funding new mortgage products, we will look to pass this on.”
Lloyds TSB Bank plc was the first to announce it would pass on November’s 1.5 percentage point cut. Since base rate peaked in July 2007 at 5.75 per cent, Lloyds TSB Bank plc has cut its standard variable rate by the full 2.75 per cent. On a typical repayment mortgage of £150,000, this represents a monthly saving of £256.10.
If interest rates are cut by 0.5 percentage points on Thursday, variable rate customers will make a further monthly saving of £43.14. If rates are cut by 1.00 percentage point, the additional monthly saving will be £85.13.
