Money News
Northern Rock has announced that it's to raise its sub-prime mortgage loan rates from August 29th. The fixed rate loans, which are aimed at people on low incomes and/or with dodgy credit histories, will cost up to 1.25% more as the mortgage bank abandons loans tracking Bank of England base rate.
News of the move, which doesn't affect the lender's core mortgage range, shouldn't come as any great surprise, given its reliance on the wholesale money markets for its mortgage funding.
The firm has been quick to point out however that it's not at risk from the fallout in the sub-prime mortgage lending market as its loans have been transferred to SPML, a subsidiary of the investment bank, Lehman Brothers, which in turn administers them for a fee.
Whilst the UK sub-prime market is more tightly regulated than its US counterpart and, in theory less exposed to the type of cold winds now blowing through the US sub-prime market, specialist lenders on this side of the pond, such as GMAC-RFC and Mortgages plc, have already raised rates.
24 August 2007 © Moneyextra.com
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