Nationwide is latest lender to increase mortgage rates

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by Kay Murchie

Nationwide has increased rates on its tracker mortgages which means rates for new borrowers will rise by between 0.05% and 0.15%. Nationwide’s fixed rate mortgage deals for new customers remain the same, while existing borrowers are not affected.

This is the second time the UK’s largest building society has increased rates since November, in spite of interest rates being reduced in December.

Other lenders including Bradford and Bingley, Cheltenham and Gloucester, Yorkshire Bank and the Woolwich have all put their tracker rates up since the start of 2008.

Matthew Carter of the Nationwide 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.

David Hollingworth of L&C Mortgages said challenging market conditions were continuing to put lenders under pressure.

Consequently, the trackers currently available to new borrowers were not as ‘keen’ as they were 12 months ago.

Mr Hollingworth added that we shouldn’t expect to see trackers becoming much cheaper in the near future until this uncertainty has worked its way through the market.

The Bank of England left rates unchanged earlier this month but many analysts believe that there will be a rate reduction next month, particularly after the dramatic 0.75% cut in US interest rates announced yesterday.

However, following the US interest rate reduction, Mervyn King the Bank of England’s Governor, expressed concerns regarding inflation, which could prevent any further cut in interest rates.