2 Jun

Rate changes unlikely to cause mortgages holders to "desert the ship"

Rate changes unlikely to cause mortgages holders to "desert the ship"

Changes to the rates of variable mortgages introduced by one lender are unlikely to make many customers take their business elsewhere, it has been suggested.

According to Paula John, editor at Your Mortgage, the alteration of the variable-rate structure on Lloyds TSB and Cheltenham & Gloucester home loans will probably not make many Britons "desert the ship overnight".

Her comments came after the lender announced that new customers will revert to a rate of 3.99 per cent when their mortgages come to an end.

However, existing customers will stick to the previous 2.5 per cent level.

Ms John stated: "While some people will be disappointed and eventually existing customers will see the cost of their standard variable-rate go up, overnight it is not going to have a massive impact."

The expert also noted that banks are under commercial pressures and have been forced to backtrack on the initial deals after it became clear that the base rate is likely to remain low.

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