Lloyds TSB To Offer Mortgages To Northern Rock Fixed Rate Customers
Lloyds TSB is to offer Northern Rock’s fixed-rate mortgage customers the chance to switch to their mortgages when the fixed rates come to an end. Northern Rock has about 180,000 such customers.
Lloyds TSB has finalised a deal with Northern Rock to take thousands of fixed-rate mortgage customers from the struggling north eastern former building society to the Black Horse giant.
It was Lloyds who were the nearest thing to a rescue package from the banking fraternity for Rock last year, before deciding not to proceed.
The deal will mean that Rock customers coming to the end of fixed-rate mortgages will receive a letter offering them the chance to switch their mortgage to a similar product with Lloyds TSB, which will also include the waiver of a £99 application fee. These Rock mortgage holders will also be given the alternative of staying with Rock, but switching to a variable rate. Over the next three years, around 180,000 Rock customers will see their fixed-rate deals come to an end.
Chairman of Northern Rock, Ron Sandler, said that the deal will save jobs for some 100 people who will transfer to Lloyds TSB to help with the switches. He was happy that it was a positive development, helping Rock to manage the mortgage redemptions coming up.
Former finance director Helen Weir took over UK retail banking at Lloyds TSB just two months ago, and this represents her first real deal.
The European Commission has criticised Sandler’s rescue plan for Northern Rock, as they claimed that the bank could reduce its size more speedily, enabling loans to be paid back to the Bank of England sooner. Brussels say that the loans could be paid ahead of the 2010 schedule as laid out in Sandler’s plan, and the Commission has also voiced concerns about the scale of the downsizing, which will lose 2,000 jobs from the business. The Commission says that more severe cutbacks on jobs would reduce the amount of time government money was on loan to the ailing bank. It is to investigate further.
