Nationwide raises mortgage rates

Nationwide is increasing the cost of some of its mortgage deals for the second time in two weeks.

The UK's second-biggest lender has announced it will raise interest rates on some of its fixed rate products by between 0.12 per cent and 0.32 per cent. The change will come into affect on Friday.

The building society is following a recent trend of increasing the cost of mortgages despite the Bank of England slashing the base rate by 0.25 per cent to 5 per cent.

Nationwide already increased the cost of its fixed-rate deals by 0.2 per cent two weeks ago.

However, the group is also launching a new three-year fixed-rate mortgage at a lower rate than previously offered.

Rates on the home loan range from 5.75 per cent for borrowers with a deposit of at least 25 per cent, to 6.45 per cent for people borrowing 95 per cent of their home's value - 0.2 per cent lower than the old deals, although the arrangement fee is £100 higher at £599.

The lender has also launched a three-year tracker, with rates ranging from 5.99 per cent to 6.59 per cent depending on the size of deposit.

Matthew Carter, Nationwide's director of mortgages, said: "We understand borrowers' concerns about the availability of affordable mortgages.

"Our newest offers are designed to meet the needs of those borrowers who deal with us directly. They demonstrate our commitment to offering good value mortgages whilst keeping a focus on prudent and sustainable lending."

The mortgage market is currently changing on a daily basis due to problems caused by the credit crunch which has seen lenders raising their rates, increasing the deposits they demand and withdrawing deals that are attracting too much uptake.

There are now just 4,242 different mortgage deals available, compared with 15,599 at the beginning of July before the credit crunch first hit.

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