Lloyds ups SVR for new borrowers

Lloyds Banking Group (LBG) is to introduce a Homeowner Variable Rate of initially 3.99% for new Lloyds TSB and Cheltenham & Gloucester (C&G) mortgages from 1 June.

This will be in place of its current Standard Variable Mortgage Rate (SVR).

It will not apply to existing Lloyds TSB and C&G customers, who will remain on or revert to the existing SVR, which is guaranteed to be base rate + 2%, unless they take a further advance or switch deals.

The new rate will then only apply to the amount being transferred or the additional amount being borrowed.

Customers taking mortgages from 1 June will not revert to the new rate until June 2012.

In addition, a reversionary rate of 4.84% will now apply to all new C&G buy-to-let mortgages from 1 June.

Stephen Noakes, commercial director of mortgages, Lloyds Banking Group, says: "The new rate balances the needs of our customers with the commercial needs of the business. In the light of market conditions, particularly ongoing higher funding costs, we have introduced this new rate for new mortgages only.

"The Homeowner Variable Rate is priced very competitively and below the average of other major lenders. It means that we can continue to offer a wide range of competitive and innovative products."