RBS slammed for withdrawing fixed rates

Royal Bank of Scotland, the taxpayer-funded bank, drew criticism last week after withdrawing its two-year fixed-rate mortgages — only days after raising rates on some deals.

RBS pulled its two-year loan at 3.89% for borrowers with a 30% deposit. The move comes while rival lenders have been cutting rates and relaxing criteria — and it calls into question RBS’s pledge to boost lending by £25 billion over the next two years.

Ray Boulger of John Charcol, the broker, said: “RBS says it is running four days behind on its processing. I would expect this of lenders that have had cracking deals, but RBS certainly hasn’t had any.”

He added: “I suspect that they’re riding at maximum capacity in terms of the funding they have allocated.”

RBS is among the banks that have pledged to lend £9 billion to households this year.

The bank pulled the deal, available through brokers, on Friday — five days after raising rates on the same loan and other three and five-year fixes by up to 0.7 percentage points.

Cheltenham & Gloucester, owned by Lloyds, and Woolwich, part of Barclays, cut mortgage rates this month while Abbey increased the amount it would lend as a proportion of the purchase price from 60% to 70% last week.

RBS denied that it had run out of funds for the two-year loan. It would not rule out raising the cost again.