There were further signs today that the recent interest rate cut will not lead to cheaper mortgages as the UK's biggest building society announced it was raising rates on its loans for the second time in just over a week.
Nationwide building society said it would be adding between 0.24% and 0.6% to the cost of its tracker deals, which have an interest rate pegged to the Bank of England's base rate.
A previous round of price rises last Tuesday added 0.3% to the cost of these loans. When the new changes come into effect tomorrow a three-year tracker-deal for a borrower with at least a 40% deposit will cost 6.18%. Last Monday the same deal cost 5.64%.
Borrowers with the smallest deposits will see the biggest price rises, with the society increasing the tracker margin on large loans by up to 0.6%.
On the society's lifetime tracker deal, borrowers with less than 25% to put down will pay a margin 2.03% above the base rate - an increase from the current margin of 1.43%.
On the three-year deal the margin will be increased from 1.49% to 2.08% for borrowers with deposits between 10% and 15%.
The two rounds of increases are enough to more than offset the 0.5% fall in the Bank of England base rate, which Nationwide will pass on to borrowers from November 1.
Matthew Carter, divisional director for mortgages at Nationwide, said the society had increased rates in the light of competitor changes and market conditions.
"It is regrettable that we have to increase our tracker rates, but we must take into account ongoing volatility in the wholesale markets and the high cost of funding," he said.
"These changes will allow us to maintain control of the volume of business the society is attracting, and to continue lending in a responsible and prudent way."
Source
guardian.co.uk
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