Rock in mortgage deal with Lloyds

HelpWhereIcan

http://news.bbc.co.uk/1/hi/business/7437100.stm

Lloyds TSB has reached a deal so that Northern Rock mortgage customers coming to the end of their fixed rate deals will be encouraged to switch to it.

Selected customers will be sent letters and brochures from Lloyds and will have the standard application fee waived.

Since nationalisation Northern Rock has made it clear that one of its aims is to reduce the size of its loan book.

Lloyds TSB will pay a commission to Northern Rock for each customer who switches to it.

Customers offered Lloyds products may also choose to go to Northern Rock's standard variable rate or switch to another provider.

Northern Rock was nationalised in February and has since said it will cut about 2,000 jobs by 2011 and reduce its residential mortgage lending by half.

The European Commission is currently investigating the legality of the government's involvement.

On Wednesday, the commission invited comments from interested parties on Northern Rock's bail-out, giving them a 3 July deadline.

andy-man

I spoke to Northern Rock this morning. Dont get too excited, your mortgage wont just transfer to Lloyds they will just write to you saying 'would you like to apply to us?' not sure what 'fee' will be waivered but going to a broker woudl still be the best option I think....

payless

wonder what LTV LLoyds will take, and whether it will be underwritten!

HelpWhereIcan

All underwritten I suspect and I love the

Selected customers will be sent letters and brochures from Lloyds and will have the standard application fee waived.

I suspect that will be the Low LTV people who are probably better off looking at the whole market.

Remember C&G do no more than 90% LTV (ok for most NR customers) and that their best deals are at 75% - with most of those capable of being bettered on the open market.

Let's hope the commission helps NR pay the BoE back quicker improving the options for those that do have to remain with them or whose deals don't come to an end for a few years.

Afterall once the debt is repaid they will be re-privatised and back in the market - possibly as a Lloyds TSB subsidiary. What a sweetner for Lloyds TSB to buy NR from the government when their debt is reduced (sorry, I mean board of NR who are nothing to do with the government).

Ian_Griffiths_Halifax

This is a breach of Data Protection if the client ticked the box stating that they didn't want marketing materials from Northern Rock or Other Parties.

I'm all for good deals for people to be able to switch to, that's what us mortgage brokers do for a living, but Northern Rock made a promise to Brokers that they would advise clients to seek advice from their original Broker at the end of their deal, not give their details to another lender.

homer_j_3

would a 1 off commission repay back taxpayers more speedily than having accounts on SVR?

Clearly from a NR perspective, its reducing risk, customers are having the option to move but.......... those with less than 90% ltv should have no issues moving anyway - unless there are other issues such as high income multiples, change of financial profile etc.

This would then beg the question of - what benefit does this bring anybody? Those that cant move, won't be moved and those that can be moved are being told that the c&g are right for them when clearly there may be better deals out there

_Andy_

I'd imagine the application fee in question is the £99 upfront, not the arrangement fee.

HelpWhereIcan

homer_j wrote: »

would a 1 off commission repay back taxpayers more speedily than having accounts on SVR?

Possibly not, but a mass redemption of mortgages would - the commission just a nice little bit extra.

Agree there could be data protection issues, but suspect that may also be where the phrase 'selected' comes in.

As far as their promise to advise customers go back to the original broker - always a joke. They were talking to some of the major national brokers and networks as well as C&G about this kind of deal.

Think the C&G option (single lender, single product range) gives the existing broker the best chance of keeping the client - they will just have to be properly diarised.

MortgageMamma

Ian_Griffiths_Halifax wrote: »

This is a breach of Data Protection if the client ticked the box stating that they didn't want marketing materials from Northern Rock or Other Parties.

I'm all for good deals for people to be able to switch to, that's what us mortgage brokers do for a living, but Northern Rock made a promise to Brokers that they would advise clients to seek advice from their original Broker at the end of their deal, not give their details to another lender.

Since when have lenders kept their promises not to cross sell to or poach our clients. take HBOS for example. You really shouldnt expect a lender to actually stick to their claimed principles. They are just tarts.

Leon_W

I don't think Lloyds would want NR as a subsiduary HelpWhereICan as NR is digging one dirty great big hole for itself.

A recent headline noted that people in arrears on NRs book had gone up to something like 3%. This percentage is set to rise considerably as all the "good" customers move away leaving NR with a mortgage book that is almost completely made up of Togethers, anyone over 90% LTV (roughly) and customers in arrears. Who would want that ?

These are the "vulnerable" who are the most likely to get into trouble, so it stands to reason that as they become a higher percentage of NRs mortgage book the arrears figures will rise exponentially to give some tabloid journalists a nice pile of fodder to feed on !

DRS1ONE

So if Lloyds are able to cherry pick Mortgage customers from NR. NR will be left with vulnerable mortgage customers with above 90% LTV. Can somebody tell me which company would want to take this on?

As said NR are digging a dig hole.