By Matthew Legg

Last updated 11:54, Tuesday, 30 September 2008

MORTGAGE holders will bear the brunt of the nationalisation of lender Bradford & Bingley (B&B), according to Britain’s best-known finance expert.

Warning: Customers with mortgages could face increased rates and savers should keep an eye on their interest

Martin Lewis, creator of website moneysavingexpert.com, said people with mortgage deals coming to an end with B&B could now be hit with huge hikes in rates.

The rationale is to force them to switch to other lenders, he said.

But, with other lenders also putting up rates, some will be left with unaffordable monthly repayments.

Mr Lewis said: “This is where it gets really worrying.

“When Northern Rock was nationalised, in order to help it repay some of its debts, it pushed up mortgage rates for those no longer on fixed or discount deals to hideous penalty levels, to encourage them to ditch and switch to another lender.

“It is possible the same will happen for Bradford & Bingley.

“This wouldn’t be a problem in a normal mortgage market, but right now, especially for those who have over borrowed, it’s incredibly tough to get a new deal.

“This could leave many sitting at an unfeasibly high rate, unable to deal with it.

“I would urge the Government to take great care; if not, we could start to see nationalised repossessions.”

The Government nationalised Bradford & Bingley yesterday, taking over its £50bn mortgage and loan books.

The bank’s savings business was bought by Spanish bank Santander.

Savers with B&B can rest easy now, but are advised to monitor the interest rates on their accounts as Santander may drop them, warned Mr Lewis.

He added: “Every Bradford & Bingley saver should be monitoring their rates regularly, at least once a month over the next six months. If your account starts paying less than six per cent, ditch and switch it.”

mlegg@cngroup.co.uk