Abbey cuts mortgage rates

A spokesperson for Abbey Mortgages said: "Our focus is to provide all of our customers with value and choice, whilst 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.”

Fixed-rate products in the 75% Loan-to-Value (LTV) range are reducing by up to 0.17% and the five-year fix is now fixed at 5.75%. The rate reductions are being made to the two-year, three-year and five-year fixed rate products at 75% LTV and those with free valuation and help with legal costs (both for homebuyers and remortgage customers).

Abbey had already decreased rates on its flexible rate and tracker mortgages by 0.10% in response to the Bank of England's recent cash injection. This additional 0.05% reduction anticipates future falls in LIBOR rates and will further support the Bank of England's action in helping to bring liquidity back to the UK mortgage market.

Commenting on the move, Stuart Law, chief executive of Assetz said: "Abbey had already reduced some of it rates two weeks ago, along with the Royal Bank of Scotland. Now we have Abbey reducing rates further and the Nationwide reducing their fixed rates by 0.3% this week.

"This is an early sign that the effects of the credit crunch are beginning to ease off. However, there are still some lenders increasing rates, pulling out of the market temporarily and changing property lending terms.

"I believe it will take until around September for the mortgage market to improve significantly and it may turn out to be prudent for people coming to the end of existing mortgage deals to just accept the default standard variable rate for a few months before remortgaging."