Northern Rocks Remortgage Business To Be Directed To Lloyds

Fri, 06 Jun 2008

Northern Rock and Lloyds TSB have agreed terms to a deal that will enable the nationalised bank to reduce its mortgage book and repay the Bank of England loan .

The new deal will allow Lloyds to pick off business from Northern Rock’s best fixed-rate customers over the next three years.

Northern Rock will write to eligible customers before their fixed deals end offering a "streamlined" service for applying to Lloyds .

Lloyds will pay Northern Rock a brokerage fee for new business, which will save the jobs of around 100 staff at Northern Rock who would have otherwise been included in the bank's 2,000 job cuts.

Lloyds will consider customers with a loan to value of around 80 per cent through the service, but said customers with higher LTVs could still apply through its branches.

The bank’s chairman, Ron Sandler, has acknowledged that "adverse selection" could leave Northern Rock with riskier customers because other lenders will be unwilling to take them on.

Customers will be given the choice of going with Lloyds, staying put with Northern Rock on its standard variable rate, or looking elsewhere, when the service kicks off next month.
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