Interest increase by Northern Rock

24/08/2007

Northern Rock are looking to increase its range of fixed-term mortgages for borrowers with inconsistent credit histories.

Their sub-prime home loans by 29th August will cost up to 1.25% more. Loans related with the Bank of England's base rate will all be executed.

Marketing director Justin Urquhart Stewart, at Seven Investment Management, commented; "Northern Rock is heavily reliant on the wholesale money markets for funding its mortgages, rather than deposits,"

"These have become more expensive lately, which is squeezing profit margins at the company."

Analysts have witnessed the move as part of a broader-scale retreat from sub-prime mortgages in the UK, as financial institutions line each other alongside a duplication of the catastrophe that has cleaned off billions of dollars of US mortgages.

Victoria Mortgages, a UK sub-prime lender withdrew its range of loans to potential borrowers at the start of August.

The firm are known to launch its products by the end of the month after escalating the cost by 2.5%, explained financial website Moneyfacts.

Different lenders, such as Mortgages plc and GMAC-RFC, also increased their rates on selected products.

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