Halifax tracker rates rise
Halifax, the UK’s largest mortgage lender, has increased interest rates for new customers across a range of its home loans.
The bank has raised rates on certain tracker mortgages by between 0.1% and 0.2%, depending on the size of the loan.
The move follows a similar increase made mid-week by Abbey, and other lenders are now expected to follow suit.
Mortgage providers are now being forced to pass on the higher costs of borrowing money on the wholesale markets.
While the Bank of England’s decision not to increase the base rate in September was a comfort to hard pressed home owners, the rate at which banks lend to each other has risen steeply as a result of the US sub-prime mortgage crisis.
It is not yet clear what losses the crisis will entail and the markets are nervousness about lending to those who may be exposed.
Both the Governor of the Bank of England and the Chancellor of the Exchequer have this week criticised the lending policies of banks, with Bank of England Governor, Mervyn King, warning that it is too early to assess the implications of the recent turmoil on the money markets on the UK economy.
Mr King has also conceded that the cost of borrowing is likely to rise regardless of movements in the base rate.
The Bank of England’s base rate has traditionally controlled the cost of mortgages but this is no longer the case.
The cost of the average standard variable rate mortgage already stands at a nine-year high of 7.69%.