Abbey opts to reverse cuts made to its mortgage rates only a couple of weeks ago

Posted under General by Michael

Abbey has decided to reverse cuts that it made to mortgage rates a couple of weeks ago, pushing up borrowing costs. The Abbey has raised rates on its new fixed-rate deals by between 0.15 per cent and 0.56 per cent from 29 May.

Market observers point out that Abbey has been promising some of the most competitive rates recently for homebuyers who are able to provide a 25 per cent deposit. It cut flexible & tracker rates by 0.05 per cent on 16 May and also some fixed-rate deals by nearly 0.17 per cent.

It put the blame on increasing inter-bank borrowing costs, which hold the key to mortgage rates, for its most recent changes. Some experts do not agree with this. According to them, while swap rates have gone up by around 0.5 per cent in the past month that could well justify this hike, Abbey only seems to be adding to confusion and partly to volatility by bringing down rates on fixed deals last week only to increase them again.