Nationwide mortgage rates rise

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Nationwide mortgage rates rise

Tue 26th Feb 2008

Nationwide has raised mortgage rates for borrowers with cash deposits of 25 per cent or less, confirming analysts' predictions that lenders will be trying to distance themselves from "risky" loans following the Northern Rock crisis.

The building society raised interest rates on loans above 75 per cent of the property's value by 0.2 per cent.

Last week Northern Rock, Alliance and Leicester, Birmingham Midshire and Abbey all pulled mortgage products that offered 100 per cent or more of the property's value, the

Financial Times reported, with a number of those announcing that they would no longer lend to borrowers without some form of cash deposit.

Sean Gardner, chief executive of MoneyExpert.com, said: "It is a case of the less you need to borrow, the better deal you are going to be offered by lenders now."

He added that many lenders are concerned that they will not see their money as borrowers "overstretch" themselves and are unable to pay loans back.

Recently Abbey Mortgages found that homeowners are increasingly confused about the best mortgage deals available, particularly because of a slowdown in the housing market and uncertainty about the future of the UK economy.

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