The Abbey has recently announced that it will be raising the interest rates on some of its mortgage products as a result of the current turmoil that has hit the financial markets in the UK. The credit crunch, which was sparked in the sub-prime sector in the United States and is now having global repercussions, has affected many lenders, with some withdrawing some mortgage products, some raising the interest rates, and some even going into administration.
Northern Rock has taken a real battering over the past week or two, with billions of pounds in savings withdrawn following its need to take a loan from the Bank of England. Another mortgage provider, Victoria Mortgages, announced that it was going into administration. With the increase in lending rates on inter-bank lending along with the volatile financial markets many lenders have had no choice than to up their interest rates.
The Abbey has raised the interest rates on its tracker mortgages by between 0.1% and 0.2%. Other banks have also done the same, which means that those looking to borrow money by way of a mortgage will now have to pay higher rates of interest in addition to the five interest rate rises that were applied by the Bank of England over the past year.
A spokesperson from the Abbey stated: “These changes reflect moves in the market that have been experienced. We expect that these current trends will be sustained over a significant period and that other companies will follow immediately.”
Standard Life in another lender that has raised interest rates, and an official from the company added: “We have seen significant changes to the money markets in the last few months and this has increased the cost of borrowing internationally.”
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