I have a Ridgeback Speed 2014. I was cycling and then my rear brakes went out of alignment and were braking on one side harder than the other. So I adjusted the brakes but now the hand lever is loose. It moves and is completely loose for about 1cm before it actually does any braking action.

I noticed this: http://i61.tinypic.com/34qae7t.jpg

The cable has split and it looks like it's not just the insulation but a little bit of the inner thread as well. Is that the likely cause?

What are my options here? Bearing in mind I don't know much more than punctures, adjusting brakes and general maintenance.

Thanks.