Mortgage lender hikes tracker rate

Published:
14 October 2008
Topic:
News,Money,Mortgages

Tracker rates for new borrowers are being increased by Britain's biggest building society - in spite of last week's interest rate cut.

Nationwide announced it was raising the cost of tracker deals by between 0.06% and 0.3%, but taking last week's base rate cut of 0.5% into account, the changes effectively mean the deals are being increased by up to 0.8%.

Someone taking out a three-year tracker mortgage and borrowing 90% of their home's value will now be charged 6.49%, or 1.99% above base rate, compared with 6.19% or 1.19% above base rate previously.

Nationalised bank Northern Rock was the first lender to say it was not passing on the full 0.5% reduction in the official cost of borrowing to its standard variable rate (SVR) customers. Instead it is reducing the rate by just 0.15% to 7.34% from November 1.

Nationwide defended its decision by saying the move enabled it to control the volume of business it was attracting.

The group's divisional director of mortgages, Matthew Carter, said: "The changes we are making will allow us to continue lending in a prudent and responsible way."

Copyright © PA Business 2008

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