More misery for homeowners as Nationwide increases mortgage rates

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by Kay Murchie

Nationwide, one of the country’s largest lenders, has hit homeowners with another increase in mortgage rates - its fifth since the start of the year.

This means families face a £1,300 annual increase in their mortgage payments and are paying the price for the global credit squeeze.

The increases since the start of the year adds an extra £109 a month, or £1,308 a year to mortgage repayments.

At the start of the year, a typical repayment mortgage of £158,000 would have cost £968 a month with a Nationwide two-year tracker at 5.48%. Now the rate will increase by a further 0.57 of a percentage point, to 6.6%.

The figures confirmed the deteriorating economic conditions are having on those looking for a mortgage.

The increased mortgage rate from the Nationwide is a warning to all of Britain’s 11.8m mortgage holders. Another lender, if.com, which is part of Halifax, has announced that it is increasing its mortgage rates by up to 0.5 of a percentage point from today.

Research shows that over 10,000 mortgage deals have been withdrawn since last summer - before the credit squeeze began hitting lenders.

Experts said the pace of the disappearing deals is ‘unprecedented’, with lenders often giving less than one hour’s notice.

This latest announcement will put more pressure on the Bank of England to cut interest rates when it meets in early April.

Matthew Carter, Nationwide’s director of mortgages, said Nationwide sympathises with anyone who is concerned about the availability of affordable mortgages. They are focusing on ‘prudent and responsible lending‘ rather than increasing their market share, concluded Mr Carter.