Northern Rock increases rates for mortgage deals
The UK government has been accused of hypocrisy this evening with news that the Northern Rock has increased mortgage rates despite the downward trend in base rates. It seems on one hand that the government is trying to push each and every bank in the UK to lower rates while on the other hand they allow a nationalised business to move totally against the market.
It is also worth remembering that Northern Rock is currently instigating more repossessions than anyone else in the market place which appears to go against government advice to the sector. It looks as though these problems with Northern Rock will be replicated across the sector as the government finalises funding issues in exchange for taking substantial stakes across the board. This has also attracted much criticism as the government has not demanded a seat on any of the major banking boards and is unaware of what is going on in the "inside".
However, in many ways the authorities are in a no-win situation because if they are too lax on businesses in which they have stakes or own, they will be accused of losing control, but if they introduce strict guidelines they would be criticised for interfering with the free market.
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