Northern Rock raises fixed-rates
In a move that could be seen as a snub to the Government, state-owned Northern Rock has increased rates on some of its most attractive mortgage deals.
For new borrowers, the bank’s one-year fixed mortgage rate has increased from 3.99% to 4.19%.
Meanwhile, rates on the lender’s two and five-year fixed-rate home loans have risen by up to 0.3%, potentially adding £40 a month to the cost of a £150,000 interest only loan.
According to mortgage experts, Northern Rock is attempting to curb new lending, while only yesterday, the Governor of the Bank of England sent a warning shot in the direction of UK banks that are benefiting from a taxpayer-funded bail out but are not keen to increase their lending.
However, Northern Rock is obliged to watch its market share and keep in line with commitments on new mortgage lending undertaken at the time of its nationalisation, last February.
The bank has launched cheaper fixed-rate deals in response to recent falls in money markets swap rates and says its latest hikes are in response to the overall competition in the market.