MORTGAGE lender Bradford & Bingley has sold £4.2bn of loans in a move to boost cash reserves at a time of soaring wholesale funding costs.

The buy-to-let specialist will make a loss of between £15m and £40m on the sale of two loan books – but said the disposals will improve cash flow.

Lending rates between banks have soared to a two-month high amid fears of further tightening in credit markets.