Abbey launches "surprising" mortgage deal

Abbey has surprised the mortgage sector by unveiling a new 125 per cent mortgage, the highest secured loan product on the market.

The lender, which raised rates on a number of its tracker mortgages by between 0.1 and 0.2 per cent late last week in response to global financial problems, has now stolen a march on its rivals with the latest product.

However, the move has attracted criticism from some quarters, with observers saying that the industry has not learnt its lessons regarding responsible borrowing.

"Just when we thought there was light at the end of the tunnel and lenders would be pulling back from irresponsible lending, Abbey comes out with a new 125 per cent LTV mortgage, which is completely secured on the property," commented Torquil Clark mortgage strategist Jenny Challenor.

Ms Challenor added that she feared that "naive borrowers" could suffer as a result, with Moneyfacts.co.uk mortgage expert Julai Harris adding that borrowers should be aware of the risks of relying on continually rising property prices.


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