Because of the ever growing financial crisis in UK shores, the Bank of England was left with no choice but to assist financially restricted banks, by offering a £40 billion life line.

Lenders are rapidly increasing mortgage and loans costs because of an unexpected rise in the rate at which banks are lending to each other for three months, as those feeling the effects of the credit crunch store funds.

The Bank normally offers three-month money, which is given on a monthly basis, but will stage auctions each week as from Monday for the first time while the problems of the wholesale market still remain. The central bank has given no indication of the amount involved in up coming auctions but they are expected to be similar to the amount given on Monday, provided banks in need take up what is on offer.

This move comes into place as interbank three-month lending rates have dramatically increased to 6.28% which is considerably above the Bank’s official 5% base rate.