Lenders up mortgage rates

Date:Tuesday 14th October 2008

Banks have responded to the government's plans to revive the housing market by making mortgage rates higher.

The Daily Mail reports that despite last week's interest rate cut by the Bank of England, several mortgage lenders have increased rates on their loans.

Although the base rate has been slashed to 4.5 per cent, Northern Rock has cut its variable mortgage rate by just 0.15 per cent to 7.34 per cent.

Lloyds has increased its rates by 0.34 per cent for buyers with a ten per cent deposit and HSBC has frozen its standard variable rate at 6.25 per cent.

Nationwide is also declining loans to most people without a 15 per cent deposit.

Consumer groups and debt charities have called for more action in helping homeowners who are in arrears.

The Guardian reported that recapitalised banks Royal Bank of Scotland, Lloyds TSB and HBOS are required to help revive the market and assist struggling borrowers.

But debt charities said some of the government's £37 billion bail-out should have been used to protect against imminent repossession.