Lloyds TSB takes on Rock mortgages

Lloyds TSB has struck a three-year deal to take on customers of government-owned Northern Rock who are coming to the end of fixed-rate mortgage deals. Certain Northern Rock customers will be offered the chance to switch to a Lloyds home loan from July.

The two banks say the deal will help Lloyds "accelerate its new business growth in a low risk manner" and help Northern Rock cut the size of its balance sheet. Northern Rock said that the deal should save 100 jobs for its staff.

The banks did not say how many mortgages Lloyds is likely to take on. However, about 180,000 of Northern Rock's mortgage customers are estimated to be on fixed rate deals, and the majority of those will see their short-term ones end in the next two years.

Northern Rock customers who do choose to switch to Lloyds will get free legal and valuation work, and a waiver of the standard application fee.

Lloyds TSB's Helen Weir said: "Crucially, it will greatly reduce the uncertainty involved for customers who choose to switch providers and gives them peace of mind in the current uncertain market conditions."

Alan Clarke, One NorthEast Chief Executive and Chairman of the Northern Rock Response Group, said: "It is welcome news that this new business will require about 100 existing staff who may otherwise have been at risk of redundancy. This new agreement with Lloyds TSB very much reflects the stated aims of the bank's reshaped business model."

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