Hi °C | Lo °C Britain's biggest building society has announced plans to push up its mortgage rates for new borrowers.
Nationwide made increases of 0.3 percentage points on some of its fixed-rate products yesterday and 0.2 percentage points on tracker mortgages.
Borrowers who are already with Nationwide and choose to stay with the society for their next deal will be offered rates priced at 0.1 percentage points below the new products, meaning they face a softer blow than new customers.
The increased rates come despite the Bank of England and the Treasury's recently-launched "funding for lending" scheme, aimed at unclogging the flow of credit. They will not bring much comfort to people looking to switch from other lenders who have also been hiking their rates, blaming the weak economy and the cost of funding a mortgage.
Clare Francisat of comparison website MoneySupermarket, said: "The rates are going up and that's disappointing. The funding for lending initiative is aimed to get banks and building societies to lend. The hope was that it would result, perhaps, in increases in higher loan-to-value mortgage numbers but so far there is little evidence that is happening."
Lenders generally have also been tightening their borrowing criteria, making it tougher for borrowers to switch deals and those with lower amounts of equity are expected to have a particularly difficult time.
