Not Everyone is Raising Mortgage Rates
Northern Rock is cutting mortgage rates when others are raising theirs, leading to suspicions of it using taxpayers’ money to boost its market share. Brokers have seen an increase in enquiries for Northern Rock products since its nationalisation.
Despite economic turmoil and the fact that many lenders are being forced to pull their best deals, nationalised bank Northern Rock has cut its mortgage rates.
Both its interest rates and arrangement fees have been cut and Northern Rock has moved up the “best-buy” tables as a result.
Yorkshire Building Society has had to replace its two, three and five year fixed deals at 5.89% with higher rates of 6.19%. These deals come with a £495 arrangement fee and require a 10% deposit.
Northern Rock, on the other hand, has been able to slash its two-year fixed deal from a rate of 6.59% to an attractive 6.06% - with no arrangement fee. Rock also cut its five-year fixed deal to 5.99% from 6.69%
The two year deal compares favourably with the new Yorkshire deals, and has led to some suggestions that Rock is running with taxpayers’ money to improve its market standing.
After the turmoil in markets in the last couple of weeks, the failure of banks in the US, and the proposed takeover of HBOS in the UK, it is likely that other mortgage rates will go up around the country, possibly by 0.25%, and as soon as this week.
When Northern Rock was taken over by the Government in February and given £30bn of taxpayers’ money, it said that it would not aim for a top-three place in the best buy tables for savings, nor use its Government guarantee to promote its savings. However, its only pledge on mortgages was that it would have a share of new mortgages of less than 2.5% per year.
Brokers say that there has been an increase in the number of enquiries for Northern Rock since the Government appear to have made it a safe haven. The bank has managed to cut mortgage rates 11 times so far this year. Although other lenders have been cutting rates in recent weeks the latest market upheaval is likely to see most going back up again.
