Mortgage rates to go up for new borrowers at Nationwide

Nationwide is making increases of 0.3 percentage points on 
some of its fixed-rate products from tomorrow 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.

And 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 increased cost of funding a mortgage.

Clare Francis, a mortgage expert at 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 and 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.

Santander recently announced plans to raise the standard variable rate on its mortgages in a move which means hundreds of thousands of its existing customers face mortgage hikes from this autumn. More than a million home owners saw their rates increase in May when a string of lenders imposed rate hikes.