Nelson Mortgages

According to a recent report a number of mortgage lenders in the UK decided to hike up their mortgage interest rates in January 2008, even though there was a reduction in the base rate in December 2007 and the base rate remained unchanged for January 2008. One of the latest to hike up the rate on its tracker mortgage – which is supposed to track movements in the base rate – is the Nationwide Building Society, which recently won a poll as most trusted bank of building society.

The Nationwide pushed up rates on its tracker mortgage twice since November, and its latest rise as seen tracker mortgage rates rise by between 0.05% and 0.15%. This follows rises that were implemented by a number of other lenders. A Nationwide official stated: “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. We have had to reflect these increased costs in the pricing of our tracker mortgages.”

One industry officials said that despite the recent rises in these mortgages from a number of lenders they were still worth consideration given the expected interest rate cuts for this year.

He said: “Although tracker rates are creeping up, with the high level of uncertainty in the market at present and with the potential of further rate cuts to come this year, these types of mortgages are still worth considering.”

One mortgage broker said: “It’s a question of how competitive lenders want to be - or can afford to be. Lenders are facing the ongoing problem of a lack of stability in terms of funding. We shouldn’t expect to see trackers becoming much cheaper in the near future until this uncertainty has worked its way through the market.”

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