Building society rate hike means rocketing repayments

Following a recent announcement by a major building society many consumers could be looking at rocketing mortgage repayments that could leave them well out of pocket.

The Nationwide recently announced that it was raising the interest rates on its mortgages, admitting that this was partly to try and close the doors on new borrowers as a result of the credit crunch, which is making it more difficult for lenders to fund their mortgage operations.

According to recent figures customers with a two year tracker mortgage for £158,000 could be facing repayment increases of £109 per month, which comes to over £1300 a year in additional mortgage repayments – bad news for those already struggling to keep up with financial commitments following a range of bill and living cost rises over recent months.

Following the building society’s announcement one official stated: ‘There is now a fatal combination of people who are unable to borrow and banks who are unwilling lend. The freezing of the housing market is only likely to further exacerbate the current fall in house prices. Bank lending is now so restrictive there is no guarantee this will make houses any more affordable, particularly for first time buyers.’