Thrifty Loans

Homeowners are being buffeted from pillar to post. One minute there is news of a reduction in some fixed deal interest rates; the next there is news of higher tracker rates.

The latter became a reality as Britain’s biggest building society increased its mortgage rate, in response to the problems on the world’s stock markets over the last few days. Financial markets around the world are taking flight from the threat of recession.

Although the Bank of England base rate came down in December, and is widely predicted to come down again in coming months, Nationwide has announced that it will raise on its tracker mortgages for new customers by between 0.05% and 0.15% from Wednesday this week.

There is an expectation from mortgage brokers that other lenders, including Alliance & Leicester, will do the same thing. Woolwich, part of Barclays, raised its rates last week.

Divisional director for mortgages at Nationwide, Matthew 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.”

Funds coming into lenders are not as high as they would like, and new savings product appear to be aimed at attracting new savers. Like many of its fellow high street banks and building societies, has launched a one-year bond with a 6.25% interest rate for its best customers.

Scottish Widows followed in the footsteps of other investment companies by halting trading in its commercial property funds as the number of investors looking to withdraw their money from sector continued to grow. It now has a six month delay on withdrawals, as other fund managers have done at Aegon and Friends Provident