Mortgage brokers dubious about new Abbey account

Date:Monday 3rd November 2008

A new Abbey account launched for those saving to buy their first home has been criticised by some mortgage brokers.

The Abbey First Home Saver Account aims to help first-time buyers save for the deposit on a property.

It offers an eight per cent annual equivalent rate (AER) for first-time buyers aged between 16 and 35.

Account holders must pay in between £100 and £300 a month by standing order, saving a maximum of £5,000 with no partial withdrawals permitted.

Alison Brittain of Abbey said the account helps first-time buyers to get "more competitive, more affordable mortgages".

But Richard Morea of London & Country mortgage brokers told the Guardian that despite the "attractive" interest rate, the best deals are available only for people with a 40 per cent deposit.

He also noted that the £50,000 maximum enables the purchase only of a home worth £125,000.

The paper also reports that Vince Cable, Liberal Democrat shadow chancellor, called Abbey's lending levels "quite bewildering and completely mad", though the lender claims it gives large loans only to those with clean credit histories, little debt or no dependants.