Mortgages Uncovered

In response to this week’s Bank of England base rate cut the Abbey promptly raised its interest rates on its “trackers” by 0.5% completely eradicating the benefits of the government’s emergency cuts.
As the UK’s second largest mortgage lender the decision, they say, is due to the recent freeze in the money markets.

In recent months it is the tracker mortgages that have been drawing the most attention and have looked the most viable for borrowers as expectation had been mounting in the run up to the B of E base rate cuts (which the rates on Tracker Mortgages are directly dictated by). It seems though that lenders are now raising their rates and taking off certain deals to protect their profit margins as they don’t want them to be eroded by the Bank of England base rate cut.

Chase de Vere Mortgage Management, Aaron Strutt, said:

“Abbey has sent the message that mortgage rates depend on the money markets, not the base rate. Until interbank lending rates fall, banks will continue passing on the costs to borrowers in the form of higher rates.”

Cheltenham & Gloucester immediately pulled its popular trackers from any borrowers who are only deemed to have a small deposit. The Yorkshire Building Society went on to pull every single one of its tracker mortgages and Woolwich increased their rates on their tracker deals.

Current home owners will benefit more in the immediate term as HBOS, RBS, NatWest, Woolwich and Lloyds TSB said they are passing the rate cut directly to their borrowers as of 1st November.

A spokesman for Abbey said:

“Following the announcement that the Bank of England has lowered the base rate by 0.50 percentage points, as of this Friday Abbey is maintaining rates on its range of trackers for new customers. This is a reflection that the short term variable funding costs have not reduced.