Borrowers whose mortgages are now being serviced by Cerberus Capital Management, an estimated 100,000, will fail to see the 0.25% rate cut announced this month applied to mortgage repayments.
Last year, Cerberus bought Northern Rock mortgages worth £13bn from the government’s holding company, UK Asset Resolution (UKAR), with £3.3bn of the loans sold on to TSB – equivalent to 34,000 customers.
Those customers now being managed by TSB under an entity named Whistletree, are already benefitting from a 0.25% cut to their standard variable rate. Customers still with Northern Rock Asset Management will also receive a reduction to their mortgage rate.
Lord McFall, a founder of the New City Agenda think tank, has campaigned for Northern Rock customers to receive a fair deal from the numerous sales. In January, McFall wrote to UKAR urging for borrower protection against changes to the terms and conditions to their mortgages, while calling for an option to introduce fixed rates to allow customers greater certainty over their mortgage repayments.
In another letter sent earlier this year by former economic secretary Harriet Baldwin to Andrew Tyrie, chair of the Treasury Committee, Baldwin said that while the terms of conditions of the mortgages would remain the same, Cerberus, like any other lender, had the commercial right to raise SVRs.
McFall said: “UKAR’s failure to put in place adequate protection has left former Northern Rock customers facing a lottery as to whether they benefit from the Bank of England’s rate cut.”
There are also concerns that a securitisation deal for £2.7bn of mortgages sold to Commercial First as part of a group of firms led by JP Morgan will not benefit from a reduction to their SVR, due to the terms of the 3-month LIBOR agreement set out under the deal.