Abbey 'to raise rates'

High street bank Abbey is poised to raise mortgage rates again, it has been reported.

The Times has claimed that the bank is to increase its fixed-rate mortgages by up to 0.56 per cent, despite making cuts in rates as recently as last week.

It stated that the bank will cite increases in Libor rates for the move amid speculation that the Bank of England will reverse its recent policy of cutting interest rates in order to curb the recent rise in inflation.

This would mean the current two-year fixed-rate deal rising from an interest rate of 5.95 per cent to 6.38 per cent.

A spokesman for Abbey was quoted by the paper saying: "As a result of our strong position in the market we were able to reduce fixed rates last week, but the market changes have required us to pass on these increases."

Those keen on obtaining a house may decide such moves make the self build option better than buying.

Figures released yesterday by the British Bankers' Association showed that the number of loans for house purchases was down by 39.4 per cent in April from a year earlier, despite the figure representing an increase on March's figures.


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