Northern Rock warns of UK rates pressure

Northern Rock today warned annual profits would be hit as rising interest rates in the UK took their toll on margins from cheap fixed-rate home loans.

Shares in the group plummeted by 11% after Northern Rock said underlying profits for the year would miss analyst expectations.

Northern said it was making less money from its popular fixed rate mortgages, with the wait for customers to come off mortgages set two or three years ago contributing to a drop in net interest income of around £180m (€267m) to £200m (€297m).