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Nationwide Raises Interest Rates
Nationwide has increased its tracker rate for the new borrowers citing high cost of funding in the market.
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London (FPRC) January 28, 2008 -- Nationwide, the UK’s biggest building society raised interest rates for the second time since November, despite the base rate witnessing a fall in last month. Currently, the interest rates are expected to fall further next month, though there are enough indications that it would only be a small reduction.
Nationwide said that interest rates on its tracker mortgages would increase between 0.05% and 0.15% for the new borrowers. Financial experts say that other lenders including Alliance & Leicester are expected to follow suit.
Matthew Carter, divisional director for mortgages at Nationwide, justified the rise in the cost of borrowing. Carter said: “The costs of funding remain high and we have found it necessary to follow other lenders who have recently increased their rates. The costs of funding from both the wholesale and retail markets have increased, and as a result we have had to reflect these in the pricing of our tracker mortgages.”
Lenders are offering new savings products to counter the shortage of funds coming their way. Nationwide has recently introduced one-year bond for its select customers that will pay 6.25% interest rate. Similarly, other players in the financial market have also introduced such products in order to attract savings from consumers.
The mortgages, secured loans and other long term loan plans have registered an increase in their interest rates since the credit crunch and global financial markets meltdown started affecting the UK financial markets.
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