Northern Rock raises interest rates on Bad Credit Mortgages

Northern Rock’s one of the UK largest bad credit mortgage lenders has raised its rates on fixed-term mortgages for borrowers with bad credit histories.

From 29 August, the cost of bad credit mortgages will go up by 1.25%. Bad credit Mortgages from Northern Rock will no longer track the Bank of England’s base rate.

The move comes as the US bad credit mortgage fiasco has lend to a worldwide stock market slump and credit crunch which as lend banks and lenders to tighten their lending criteria to people with bad credit history. Financial institutions are now a lot more cautious to whom they lend money to and are protecting themselves against any replication of the US bad credit mortgage crisis.

The UK has seen a sharp increase in home repossessions which is now at an 8 year high. This year over 14,000 properties have been repossessed, 30% more than last year, according to the Council of Mortgage Lenders. 1,25,100 households are behind in their mortgage payments.

Victoria Mortgages, a UK bad credit mortgage lender, withdrew its range of mortgages to future borrowers at the beginning of August, is expected to reintroduce them soon after increasing the cost by 2.5%, according to financial website Moneyfacts.

Other lenders, such as GMAC-RFC and Mortgages plc, raised rates on their bad credit mortgage range this week too.