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Northern Rock to increase sub-prime rates by up to 1.25 per cent

Northern Rock will be increasing its sub-prime fixed rates by up to 1.25 per cent from August 29.

The lender will also be withdrawing all sub-prime trackers until further notice.

In a notice sent out to brokers, it says that it will be reducing procuration fees within its niche prime and light adverse product categories to 0.75 per cent.

This comes after weeks of stock market turmoil which saw Northern Rock’s share price fall from its 12 month high of 1258p to 621p.

Northern Rock also attempted investors’ fears over its exposure to the US sub-prime crisis this week. In a statement to the stock market, Northern Rock says its total investment in US collateralised debt obligations and morgage-backed securities represent just 0.24 per cent of its total reported assets of £113bn.

It says it has £200m exposure to US CDOs and £75m to MBSs.

The last few weeks has seen a whole host of lenders reprice their non-conforming product ranges. GMAC announced earlier this week that it will increase rates by 0.75 per cent, whilst Kensington will be increasing its rates by 0.55 per cent.

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