Mortgage rates to increase

Permalink: Mortgage rates to increase
by Kay Murchie

Nationwide, the biggest building society, said key mortgage rates are to increase from today and new tracker mortgages are to increase by up to 0.2%.

The move follows similar increases by Abbey, Bank of Scotland and the Halifax sparked by the worldwide ‘credit crunch’ which has pushed up the cost of borrowing for many financial organisations.

The announcement came as house prices dropped in 5 regions during September - the East Midlands, the North- East, Wales, the South-West and East of England. London and the South had continued to see big increases but, generally, a slowdown is anticipated throughout the market over the next 6 months according to The Land Registry.

The UK average house price was £182,914, up by 9.4% in the last 12 months. The most expensive properties were in London, with an average cost of £349,838, while the least expensive were in the North-East at £128,758.

The Land Registry said that buyers are being driven out of the market in many parts of the country due to higher interest rates. First-time buyers are expected to find it harder to find someone willing to lend them more than 90% of a property’s value.

Nationwide announced that the growth in property prices has dropped to 9% - the lowest level for nearly 12 months. Furthermore, statistics from the British Bankers’ Association said the number of loans agreed for house purchase in August 2007 were down by 14% compared with August 2006.