Alliance & Leicester head of specialist lending Jeremy Claridge says lenders must be more open about their exposure to the US sub-prime crisis.
Claridge says the market is spooked because lenders have not been open enough.
A&L increased pricing on its near-prime and credit-adverse range by 0.75 per cent last week and Claridge says it will not rule out further rises. The lender sells its loans on completion to Lehman Brothers.
Claridge says: “It is 80-20 that we will have to move rates again but our lending criteria are fairly conservative so the type of collateral that we are originating is relatively clean and we will not have to increase as far as others in the market.”
Northern Rock, which has a similar arrangement with Lehmans, has increased sub-prime fixed rates by as much as 1.25 per cent. The move saw it withdraw all its sub-prime tracker products until further notice and reduce proc fees on niche prime and light-adverse products to 0.75 per cent.