New blow for homeowners as Lloyds INCREASES cost of mortgages - days after getting £5.5bn taxpayer lifeline
By Justin Harper and Sam Fleming
Last updated at 1:10 AM on 17th October 2008
Lloyds TSB is hammering families with higher mortgage costs only days after securing a £5.5billion taxpayer lifeline.
It not only refused to pass on last week's Bank of England rate cut for its new tracker mortgages, but from today it will increase rates on its trackers by between 0.3 and 0.5 per cent.
The bank is being quasi-nationalised under the Government's rescue scheme. It also stands to gain control of the country's largest mortgage book after Gordon Brown eased its takeover of ailing Halifax Bank of Scotland.
The Government had said Lloyds and other banks receiving taxpayer money would offer 'competitively priced lending' at 2007 levels.
But Lloyds's refusal to ease the cost of borrowing will pile the pressure on families already struggling with mortgage payments and rising utility bills.
The Bank of England last week slashed its base rate by a half-point to 4.5 per cent, but many financial giants are refusing to pass on the benefits to customers.
Only 23 banks and building societies out of 85 have said they will reduce standard variable rates.
Rob Clifford, at broker Mortgage Force, said: 'You would expect lenders to be more sympathetic to customers, seeing as they are benefiting from taxpayers' money to keep them afloat.
'We'd like to see more fairness in the way they treat borrowers, but this is not happening so far.'
Yesterday the Bank of England said it would offer more generous facilities to banks to encourage them to do business with each other, rather than hoarding cash.
From Monday, the Bank will open a 'soup kitchen' to allow commercial lenders to borrow government bonds in exchange for a wide range of collateral in their dealings with other City firms during periods of market stress.
It will allow them to trade less attractive assets such as bundled up mortgages for the ultra-safe government securities for a period of 30 days.
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