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Mortgage lenders criticised for upping rates

Nationwide and Alliance & Leicester have been strongly criticised after announcing increases to rates on their fixed-rate deals, despite yesterday's cut to the key base rate of interest. Amid signs of a weakening housing market and predictions that economic growth will slow, the Bank of England yesterday cut interest rates by 0.25 per cent to five per cent. However, on the same day, Nationwide confirmed it is to increase the rates of its range of fixed rate deals by between 12 and 32 basis points. Similarly, Alliance & Leicester said that it is raising the rate on its fixes by between 20-30 basis points. Ann Robinson of price comparison site uSwitch said that unless lenders begin to adopt a more consumer-friendly approach, the lack of confidence in the property sector will become worse. She commented: "Many lenders are yet to pass on the recent base rate reductions. Instead they are busy increasing rates, demanding larger deposits, tightening lending criteria and, in some cases, withdrawing deals from the market."By refusing to pass on rate reductions and taking extreme measures to reduce business volumes, lenders are fuelling the current lack of confidence in the property market."

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