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Three leading lenders withdrew their tracker mortgage ranges last night, while another sharply raised the cost of its deals - hours before a widely predicted cut in interest rates.
Lloyds TSB and its Cheltenham & Gloucester mortgage arm, Barclays' Woolwich division, and the nationalised Northern Rock all withdrew their tracker home loans, shortly after Abbey increased the rates on its new deals by 0.5%.
The Woolwich has some new deals on offer from today but is limiting the maximum loans on these to 70% of the property's value.
Growing numbers of homeowners have been opting for base-rate tracker mortgages after the Bank of England's decision to cut interest rates by 50 basis points, to 4.5%, last month, and amid predictions of a sizeable rate cut today. These deals shadow the base rate. The number of people choosing tracker home loans in October increased by 12.5% on the previous month, according to a new survey by Spicerhaart Financial Services.
But the moves by lenders indicate that, while the cost of borrowing is falling, many homebuyers and those switching to new deals will be paying substantially more every month than their counterparts who took out their products a few weeks or months ago.
Gordon Brown urged banks yesterday to pass on rate cuts to customers. "What we've been trying to do over the last few weeks is get the liquidity into the system, recapitalise our banks and then get them to resume the lending that is necessary," the prime minister told parliament.
Lloyds TSB/C&G is to introduce a new tracker range early next week. "In order to manage volumes and reprice its range in line with the market, the tracker range will be temporarily withdrawn at close of business today [Wednesday]," it said.
Stephen Noakes, C&G's marketing director, added that Libor - the rate at which banks lend to each other - "remains well above base rate, and our competitors have already changed their trackers to reflect this. To help us manage our business volumes and maintain a high level of customer service, we have to review our tracker range".
Northern Rock withdrew its residential and buy-to-let trackers last night, while Abbey increased the rates on its tracker mortgages by 0.5% on Tuesday, which means two-year deals for new borrowers are now priced at 6.29%.
Louise Cuming, head of mortgages at the price comparison website moneysupermarket.com, said a "battle" was taking place, with lenders lining up against the government.
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