Customers taking out a tracker mortgage with the lender will now see their rates rise by 0.25%, with immediate effect, in a move which has been slammed as “cynical and unwarranted”.
The changes come as Halifax passes on the rate cut to its current variable rate customers, with effect from 1 October. Customers with Halifax and Lloyds on either a homeowner or standard variable rate will see a reduction of 0.25% in line with the base rate.
A spokeswoman for Lloyds Banking Group, said: “The Bank of England base rate is only one of a number of factors that we take into account when reviewing interest rates. We continually review our rates in line with the market and competitors, and these changes form part of our ongoing rate reviews across our product ranges.”
However, Jonathan Harris, director of Anderson Harris, criticised the lender’s decision to increase rates for new borrowers.
“Halifax’s move is cynical and unwarranted. More than ever, banks should be looking to make lending as attractive to potential borrowers as they can. If the market continues at a slow pace, banks will be caught short of hitting their lending targets at the end of the year. Other lenders may follow suit but there is an opportunity for those who want to attract customers by not taking such a cynical step.”
In the run up to the Bank of England’s announcement, a number of mortgage lenders also appeared to pre-empt a reduction to the base rate, with Natwest, Halifax, TSB, Coventry Building Society, Santander, RBS and Scottish Widows Bank all increasing rates on their variable tracker deals, according to Moneyfacts data.
The majority of lenders have reduced their rates for SVR and tracker customers in line with the Base Rate since it fell on 4 August, but just last week Nationwide increased selected variable tracker rates by 0.10% at the same time as reducing others by 0.25%.
Alex Smith, senior mortgage and insurance adviser at Capricorn Financial, said he has seen an approximate 0.2% increase in tracker margins since the referendum result, as lenders speculated about if and when the base rate would be reduced.
“With lenders such as Halifax and Nationwide increasing margins again, some tracker rates are around 0.3 – 0.5% more expensive than they were before the referendum. This cost is picked up by the customer, and other lenders may follow if they find they are too far out of line with the wider market.”
He added: “Nationwide did this last week as well via a masterclass in spin. By this I mean via a headline grabbing announcement of reducing fixed rates but only ‘changing trackers’, which were in fact increased.”
Andrew Montlake, director at Coreco, said that borrowers looking to move onto or take out a tracker mortgage should act now, with more lenders likely to follow Halifax’s lead.
“It is not unexpected for lenders to increase tracker rate products at a time when the Bank Base Rate is rising in order to continue to protect their margins. No lender wants to get into a position where rates reduce down to zero or even negative so I expect other lenders to follow suit.”