Abbey rates cut on three-year fixed deals while Nationwide rates rise

Date:Wednesday 22nd October 2008

Abbey rates for three-year fixed-rate mortgage deals have been reduced, while Nationwide rates have been increased.

The cuts have been made in response to the most recent Abbey Remortgage Index, which found that three-year fixed-rate deals are the most in demand.

As a result, Abbey is slashing the rate its own such product for 70 per cent loan-to-value.

The 0.15 per cent cut, to 5.39 per cent, will come into effect tomorrow.

Abbey's index found that 56 per cent of homeowners favour fixed-rate mortgages, while last month the figure was 52 per cent and 47 per cent in the month before that.

Nici Audhlam Gardiner, director of Abbey Mortgages, said borrowers "are not willing to gamble on a rate cut".

But Nationwide has said it will add between 0.24 per cent and 0.6 per cent to its tracker mortgage rates, the Guardian reports.

Its tracker deals are linked to the Bank of England's base rate.

Matthew Carter of Nationwide told the paper that the move was "regrettable" but said the lender "must take into account ongoing volatility in the wholesale markets and the high cost of funding".