Mortgage holders 'should do the maths' before switching

Posted: 02 Jun 2010 11:26:46 GMT

Home owners have been urged to think carefully before changing lenders after an increase in mortgage rates from two financial providers.

Following the plans from Lloyds TSB and Cheltenham & Gloucester to replace their 2.5 per cent standard variable rate with a 3.99 per cent new homeowner rate, Your Mortgage editor Paula John warned that switching lenders could end up costing more.

"If it does annoy people sufficiently then they … can switch lender; unfortunately switching lender incurs some kind of cost because remortgaging isn't free," she commented.

Ms John added that mortgage lenders have come under commercial pressures to fund prices themselves, following the Bank of England interest rate fall to 0.5 per cent.

Lloyds TSB and Cheltenham & Gloucester announced on May 27th that new customers will have to pay the increased homeowner variable rate but that it is still "competitively priced".

However, existing customers will still receive the original standard variable rate of 2.5 per cent.


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