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Lloyds and Halifax axe in-branch tracker mortgages

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10/06/2014
Lloyds Bank and Halifax have ceased offering tracker mortgages in their branches, Lloyds Banking Group has confirmed.
Lloyds and Halifax axe in-branch tracker mortgages

The changes do not affect intermediary or telephony channels, both of which still offer a range of tracker products.

Lloyds Banking Group said the changes were made as the range of tracker products available in its branches was no longer competitive compared to its own fixed rate offering.

It said intermediaries were able to compare its tracker products against the wider market where “there may be greater differentials in interest rates”.

The withdrawal was made on April 15 but Lloyds said it was not linked to the Mortgage Market Review (MMR) rules.

A Lloyds Banking Group spokesperson said: “We regularly review our mortgages to ensure that we meet customers’ needs. The low interest rate environment meant that when we had trackers in the market recently they had very similar interest rates as the fixed rate mortgage options.

“Due to the current level of the Bank of England Bank Rate, we would not advise customers to take a tracker mortgage that is priced similarly to an alternative fixed rate option, as there is a risk that they could end up paying more on a tracker product.

“Therefore, in the short-term, we have removed tracker products from the range.”

Data from Moneyfacts showed across the wider market tracker rates still tend to be cheaper than fixed rate options.

It said the average two-year fixed rate is on offer at 3.64% at present while a two-year tracker has an average rate of 2.78%. The number of two-year fixed products on the market far outweighs equivalent trackers, 1,229 fixes compared to 256 trackers.

The difference is even more profound when comparing five-year products. The average five-year fixed rate product is available at 4.15% versus 2.92% for an equivalent tracker.

However, just two five-year trackers are on the market currently compared to 692 fixed rate products.

Ray Boulger, senior technical manager at John Charcol, said: “The majority of deals done by John Charcol, about 85%, are fixed rate. The proportion taking out a tracker is small but for some people they are still the product of choice.

“I struggle to understand why Lloyds has made these changes in branch but not over the phone. They could have always redesigned their tracker rates to offer some benefits fixed rates don’t but they may just be trying to cull their product range.”

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