In a move which was expected, but is set to be the first of many from the main mortgage providers, Northern Rock have today announced an increase of 1.25% in their sub-prime mortgage rate.  This on the same day that US house sales fell to a five year low, is a reflection of the current market turmoil - something which is far from over.

While there had been concerns that Northern Rock were at risk from the sub-prime mortgage turmoil, they have announced that their more risky mortgages are managed by broking giant Lehman Brothers, for a set fee.  This effectively covers the former Building Society from any major fall-out in the market, and allowed many investors to breath a huge sign of relief.

Even though Northern Rock seem to have protected themselves, the same cannot be said of Barlcays who are rumoured to have some major exposure to the troubled sector.  The departure of one of Barclays Capital’s major deal makers last week has added further fuel to the fire.  Until they (and other banks) come out and confirm their exposure, the rumours will continue and grow in strength.

The financial sector is currently under a cloud, and until the situation is resolved there seems little likelihood of any sunshine!