MORTGAGE rates yesterday resumed their upward path with one lender hiking the cost of its deals by up to 1.6 per cent.
Other lenders are expected to follow suit and raise the cost of their fixed-rate and tracker deals next week after a key inter-bank lending rate yesterday hit a five-month high.
First National, part of GE Money, announced it was raising its rates
by 1.6 per cent for people borrowing more than 80 per cent of their home's value and by 0.8 per cent for those borrowing less than 80 per cent.
iGroup, which is part of the same group, said it was increasing its deals by 1.7 per cent for people with less than a 20 per cent deposit and by 1.1 per cent for those who had at least a 20 per cent deposit.
The lenders, which operate in the "non-conforming" market – with higher-risk customers – said that anyone who had already submitted a mortgage application would have to pay the new rates unless they could complete their deal by 3 October.
The move was blamed on the steep increase in funding costs seen this week amid the global financial turmoil.
The rises will bring to an end a period of falls in the cost of home loans.
One of the key inter-bank lending rates, the three-month Libor, reached 6 per cent yesterday– its highest level since 3 April, when the Bank of England base rate was 0.25 per cent higher.
The rate has now increased by just under 0.3 per cent since last Friday, although yesterday's rise was just 0.02 per cent.
The full article contains 288 words and appears in The Scotsman newspaper.
