When new mortgages revert to the new Homeowner Variable Rate at the end of the initial product period, in June 2012 at the earliest, customers can switch to a new product without paying an early repayment charge, subject to eligibility.
This allows them to identify products that may be more suitable for their changing circumstances.
No change for existing mortgages
There will be no change for existing customers with Lloyds TSB and Cheltenham & Gloucester mortgages on the Standard Variable Mortgage Rate (SVMR).
Existing customers will revert to the existing SVMR when their deal expires. Any customer taking out a further advance or product transfer will do so under the new Homeowner Variable Rate policy.
The new rate will then only apply to the amount being transferred or the additional amount being borrowed.
A spokesman for Lloyds TSB and C&G said: “This new policy is being implemented in the light of market conditions.
“It balances the interests of customers with the commercial imperative of managing the business in a sustainable and prudent fashion.
“The new rate, which reflects the ongoing substantially higher cost of funding, enables the Group to continue to offer a competitive and innovative range of products across Lloyds TSB and Cheltenham & Gloucester.”
The new rate does not apply to any of the other mortgage brands within Lloyds Banking Group, including Halifax.
Stephen Noakes, commercial director of mortgages, Lloyds Banking Group, said: “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.
"No customers will revert to the new rate until June 2012 at the earliest.
“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."
