Only a select few borrowers stand to benefit from the mortgage partnership deal struck between Lloyds TSB and Northern Rock, industry experts argue.
The agreement between the two banks, announced yesterday, will allow only fixed-rate Northern Rock customers to switch to a Lloyds TSB mortgage once they have come to the end of their deal.
The agreement has been welcomed by those who say Rock’s borrowers will now have more options once they come to remortgage.
But Louise Cuming, head of mortgages at Moneysupermarket, says that Lloyds TSB will “undoubtedly cherry pick” Northern Rock borrowers, leaving many out in the cold.
“This may be good news for some Northern Rock borrowers, but the Lloyds TSB deal will only be offered to a select tier of customers," she says.
"Lloyds TSB will undoubtedly cherry pick Northern Rock's prime borrowers and anyone who doesn't make the grade will find themselves part of a growing borrowing underclass.
“These people will face an uphill struggle to find an affordable mortgage when their fixed rate deal comes to an end.”
Darren Cook, spokesperson for Moneyfacts, says Northern Rock borrowers who have not yet sufficiently lowered their LTV will still be facing the lender's SVR.
He says: “Current products from Lloyds TSB are only available for loans up to 90% loan-to-value.
"We are concerned how Northern Rock plans to deal with those of its customers with loan-to-values higher than this, some as high as 125%.”IFAonline
Smoking biggest culprit; obesity second
Average earner will gain £840 in 2018
Will also move heritage items
Responding to letter from Treasury Committee chair Nicky Morgan