Bradford & Bingley raises mortgage rates
Bradford & Bingley, which stunned investors with a stark profit warning earlier this week, has raised its mortgage rates by up to 0.55 percentage points as it is hit by increasing funding costs.
Bradford and Bingley profit hit by subprimeThe bank, which was also forced to cut the price of its emergency fundraising on Monday and to bring in a strategic investor, said the changes were unrelated to Monday's news and were instead a result of a planned repricing as costs rise.
Several other major lenders including Nationwide have also been forced to raise prices this week as a result of rises in swap rates - derivative contracts whose moves broadly reflect changes in interest rate expectations and the cost of borrowing.
B&B said it had raised rates in its core buy-to-let range by 0.55 percentage points for fixed-rate deals and 0.45 points for new variable deals. Standard mortgage rates increased 0.10 to 0.20 percentage points.
"In our key market of buy-to-let, our competitors have been repricing upwards in recent weeks and others have withdrawn from the market completely," a spokeswoman for the bank said.
"This means that there is a risk that our lending volumes would increase to a point where our service levels would be under threat, and the increased cost of funding would mean we wouldn't make an acceptable return."
Britain's largest buy-to-let lender said it had on average repriced its range at least once a month for the last 18 months.
The bank warned in Monday's statement that rising funding costs were putting pressure on its margins, as it struggles with a lag in recovering the costs through new business pricing with mortgage redemptions slowing.
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