Cheltenham & Gloucester increases rates again

The Cheltenham & Gloucester, part of Lloyds TSB has announced that it is to raise interest rates for mortgage customers for the fourth time in two months.

As from midnight last night, all fixed and tracker rates will increase by 0.25% meaning that a two year fixed rate deal for a homebuyer with a 10% deposit will have gone up from 5.72% at the start of the month to 6.5%.

The reason for the increase has been laid at the door of increases in the swap rate after Mervyn King, the Governor of the Bank of England heaped fuel on the fire by suggesting there would not be any further interest rate cuts for the foreseeable future. Swap rates are the interest rates which lenders pay when borrowing fixed rate funds, and are often taken as an indication of where interest rates are headed. However some experts have long questioned the need for an increase in tracker rates, especially as the Bank of England base rate remains the same, and it would appear that charges of profiteering are not without foundation.

This latest increase is further ammunition to those who advise against delay when searching for a mortgage. The announcement from the C&G means that the Abbey three year fixed rate exclusive, still available at 5.78% via selected mortgage brokers is looking even better value for money, as is their 5.75% five year fixed. How long these rates remain available has yet to be seen, but brokers are advising against delay.

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