The Bank of England's weekly cash auction has seen a huge upsurge in demand as the money markets become increasingly strained.
The central bank made £52.8bn available at the auction, but banks had asked for almost £90bn in funding. The collapse of Lehman Brothers has caused a rapid increase in swap rates, making it more difficult and expensive for banks to borrow money from each other. The rise in rates has already caused some lenders to increase the costs of their loans, including an announcement from Abbey today saying some mortgages will be withdrawn. If you would like to comment on this story, contact: John Bakie Tel: 020 7484 9805 e-mail: [email protected] IFAonline
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