The Ever-Changing Mortgage Market of 2008

Will this mortgage market never calm down?  It’s so up and down and changeable at the moment; it was only last month that we were discussing the falling mortgage interest rates as the prices seemed to stabilise and then with the news of US investment bank, Lehman’s Brothers, going bankrupt, the whole process seems to have kicked off again.

This week, the main discussion is whether or not Bradford & Bingley will be nationalised, which is what happened to mortgage lender Northern Rock, and if that were to happen, does that mean that the two banks will effectively be combined?

That would be a huge change for Northern Rock, who has predominantly dealt in mortgages and nothing else, whereas Bradford & Bingley is more a typical bank/building society, offering everything from ISA’s (Individual Savings Accounts) to current accounts and trusts.

This latest news means that the risk in lending has increased, and consequently so has the cost of wholesale lending (the price at which banks will lend to each other).  As a result, mortgage interest rates are on the way back up and we will watch with interest to see the fate of Bradford & Bingley.



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