Lloyds TSB trims mortgage rates

LONDON (Reuters) - Lloyds TSB has trimmed its mortgage rates for the second time in 11 days in the latest sign that lenders are responding to a slight easing in wholesale borrowing costs.

Lloyds, the UK's fifth-biggest bank by market value, said it is reducing from Tuesday the rate on popular two-year fixed loans with a 75 percent loan-to-value limit to 6.29 percent, a decrease of 0.05 of a percentage point.

The rate for two-year fixed loans with a 90 percent loan-to-value ceiling drops by 0.11 of a percentage point to 6.69 percent, Lloyds said.

The reductions apply both to loans offered directly by Lloyds TSB, and those sold through the bank's Cheltenham & Gloucester mortgage subsidiary.

Several UK mortgage lenders have trimmed mortgage rates this month in response to a decline in the cost of interest rate swaps, used by banks to price fixed-rate mortgages.

Lloyds's latest rate cuts follows a similar reduction by C&G on July 17, while lenders including HBOS, mutually-owned Nationwide, and Woolwich, the mortgage arm of Barclays, have all reduced their rates in the last two weeks.

However, mortgage costs remain historically high, having risen sharply in the past year as banks stung by the credit crunch seek to conserve capital and protect profits. The abrupt drying-up of cheap mortgage finance has triggered a slump in UK house prices, ending a 10-year property boom.

Lloyds said the biggest cut it is introducing on Tuesday applies to its lifetime tracker mortgage at 80 percent loan-to-value, where the rate falls by 0.38 of a percentage point to 5.95 percent.

(Reporting by Myles Neligan;; Editing by Paul Bolding)