Interest rates hit Northern Rock profits

Northern Rock, like many other mortgage lenders, expected rates to peak at 5.5% during 2007 but have now revised their prediction to 6%. Interim results for the first half of 2007 reveal that profits for the six months to 30 June were £296.1m, just £2.2m more than the £293.9m seen during the same period in 2006. The lender says that interest rate rises are causing a decline in mortgage volume but this is made up for by increasing mortgage values. Northern Rock failed to fully hedge itself against rising borrowing costs when agreeing fixed rate deals at the beginning of the year and this ...