The June 27, 2007 edition of Telegraph explained how Northern Rock, Britain’s fifth largest mortgage lender, has come out saying that profits for this year will be lower than expected due to interest rates rising faster than expected.
The news had Northern Rock’s shares falling over 10pc and is on the heels of four interest rate increases since August. The Bank of England is expected to increase rates to 5.75pc, maybe as soon as next month.
In an update, Northern Rock claimed that it’s underlying profits will now be between 403m pounds and 457m pounds in the current financial year. This is an increase of 15m pounds since 2006. The City had been expecting an increase of 17pc.
Northern Rock also said that the quick rise in rates over the past year will hit profits by between 180m pounds and 200m pounds as it has not passed it’s borrowing costs to some customers.