Abbey snips mortgage rates

Abbey has cut rates on its fixed and variable-rate mortgage products, prompting premature speculation the worst of the credit crunch may be over.

The organisation will reduce the interest rate on its fixed-rate products in the 75 per cent loan-to-value (LTV) by up to 0.17 per cent.

As a result, the five-year fixed-rate deal is now at 5.75 per cent.

A similar rate reduction is being made to the two-year, three-year and five-year fixed-rate offering, again at 75 per cent LTV.

These deals also come with free valuation and help with legal costs (both for homebuyers and remortgage customers).

A spokesman for the Santander owned bank said: "Our focus is to provide all of our customers with value and choice, while continuing to review our mortgage range and rates against a competitive and dynamic market.

"As such, we have taken the opportunity to reduce rates to a small number of fixed and tracker products within our range."

The news follows an earlier decision from the Nationwide building society to cut the rates on its two and five-five year fixed-rate deals from this week.

The latest announcement from Abbey follows an earlier decision by the company to cut the interest rates on its flexible and tracker mortgages by 0.10 per cent.

The decision was taken in response to the Bank of England's recent offering of up to £50 billion of Treasury bills in exchange for mortgage-backed assets – which reports suggest may so oversubscribed that the central bank may have to swap £90 billion worth of securities.

"This is an early sign that the effects of the credit crunch are beginning to ease off," commented Stewart Law of investment specialist Assetz.

"However, there are still some lenders increasing rates, pulling out of the market temporarily and changing property lending terms."


Chris O'Toole