Lehman crisis hits home
16 September 2008
The bankruptcy of American investment bank Lehman Brothers will have an impact on the UK mortgage market as well as the US market, reports Moneyfacts.
A spokesperson said that rumours over what was going to happen to Lehman Brothers have caused the cost of borrowing to increase and now that the bank has collapsed the costs are likely to increase further.
According to Moneyfacts banks may now become more wary of lending to each other, which will affect the consumer though higher mortgage rates.
Wall Street has seen a number of dramatic events over the past few days, reports the New York Times, with the collapse of Lehman Brothers being the biggest failure of an investment bank since the demise of Drexel Burnham Lambert, according to the report.
Yesterday, Lehman Brothers filed for Chapter 11 bankruptcy protection in New York.
Meanwhile, bank Merrill Lynch has been bought for $50 billion (£27.8 billion) by the Bank of America. Merrill Lynch was worth $100 billion last year, according to the New York Times.
