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Nationwide Puts Up Mortgage Rates
Nationwide, the UK's biggest building society has increased rates on its tracker mortgages despite there having been no changes in the Bank of England's base rate.
Citing the increased cost of funding as the reason for these rate increases, Nationwide will be raising the cost by 0.05% to 0.15% across its portfolio.
These raises will not affect current customers or the fixed rate mortgage deals, which are primarily designed for new customers.
Matthew Carter, Nationwide's mortgage director said, "The costs of funding from both the wholesale and retail markets have increased, and we have found it necessary to follow other lenders who have recently increased their rates." "We have had to reflect these increased costs in the pricing of our tracker mortgages," he added.
With this move, Nationwide joins an increasing list of lenders who have already put their tracker rates up since the start of 2008. All lenders are blaming extremely tough market conditions stemming from the onset of the credit crunch.
It is expected that trackers will not become much cheaper in the near future, because there is still a lot of uncertainty working its way through the markets.
Even though tracker rates are creeping upwards, it is suggested that they are not dismissed immediately, as there is potential for further rate cuts to come this year, which this type of mortgage will benefit from.
It is expected that the Bank of England's rate-setting Monetary Policy Committee will opt for a cut in February, especially given the fact that the US Federal Reserve opted to cut their rates by a dramatic 0.75%. That said, Mervyn King, the governor of the Bank of England, has signalled concerns about inflation which would reduce the possibilty of rate cuts.
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