Mortgage News Bradford And Bingley Raises Mortgage Rates 1710
Bradford & Bingley raises mortgage rates
06 June 2008 / by Rebecca Sargent
The buy-to-let mortgage specialist has followed in the footsteps of Alliance & Leicester and Nationwide which both raised their rates earlier this week.
The trend of raising mortgage rates started months ago as a result of the credit crisis, but the housing market has continued to deteriorate throughout this year, culminating in several leading banks launching rights issues.
Earlier this month Bradford & Bingley announced a rights issue intended to raise £300million in capital from its existing shareholders. However, this was disregarded on Monday as the bank issued a profit warning after a disappointing trading report.
Consequently, Bradford & Bingley announced a 23 per cent share sale to TPG Capital, outraging its shareholders by negating their right to first refusal. The move came as the bank was forced to face up to the fact that the original rights issue offering shares for 85p each no longer had any appeal which is when it decided to sell a huge chunk to TPG.
The reported mortgage rate rises come just four days after the bank warned how rising funding costs were putting pressure on its margins. And, according to reports, the bank has stated that the increases are just standard procedure, claiming the bank changes its mortgage rates at least once a month.
According to reports, the increases are being driven by a steep rise in Swap rates – the borrowing rates between financial institutions – which have a large impact on fixed rate mortgages. And, because Swap rates have risen by 0.6 per cent in the last few weeks, fixed rate mortgage prices have been forced upwards.
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