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C&G lifetime trackers see ERCs added
1 March 2008
Cheltenham & Gloucester (C&G) has introduced a three-year penalty on its lifetime tracker products, following an increasing trend across the industry of increasing penalties and rates.
C&G will charge 1 per cent for the first three years of its long-term Base Rate tracker mortgages. This followed a similar move by Woolwich on its long-term tracker deals.
Richard Morea, technical manager for London & Country, commented: “C&G was one of the mainstays of the long-term tracker market. One of the keys to that was it had no redemption penalties on its products.
"This move doesn’t seem like much but it’s quite a major change in how we view the lender for the attractiveness of its product. If someone is looking at long-term trackers, it is a big commitment and having no penalty is important.”
Eleanor Ross, spokesperson for C&G, said: “The reason for introducing the early repayment charge (ERC) on our long-term trackers is that they are very competitive and this helps us to continue to offer a good rate to our customers and keep them competitive. We’re asking our customers to give us a commitment.”
Ray Boulger, senior technical manager for John Charcol, commented: “The impression I got was that had C&G left it ERC-free, it would have had to charge a higher rate.
"What would have been a better strategy, assuming higher pricing, would have been to introduce a product that was ERC-free, so brokers could have had the choice. The trend of increasing product pricing on the back of the loss of liquidity will continue.”