Northern Rock mortgage customers advised to shop around

A price comparison site has issued a warning to customers after a mortgage agreement was announced between two leading banks.

The three-year arrangement between Northern Rock and Lloyds TSB would allow customers to switch lenders to continue with their fixed-rate mortgage deal.

Under the deal, Northern Rock customers coming to the end of their current term would be able to switch to a Lloyds TSB mortgage.

Moneysupermarket.com has said that whilst this "may be good news for some Northern Rock borrowers", Lloyds are likely to "cherry pick" prime borrowers.

Louise Cuming, head of mortgages at moneysupermarket.com, said: "Anyone who doesn't make the grade will find themselves part of a growing ‘borrowing underclass'. These people will face an uphill struggle to find an affordable mortgage when their fixed rate deal comes to an end."

Ms Cuming has advised those eligible for the deal to "shop around before making a decision" as taking the Lloyds mortgage deal "could work out considerably more expensive".

Mortgages News posted on 06/06/2008 16:36:07