Abbey raises Mortgage rates despite Libor plunging

The Spanish owned Bank, Abbey (LON:ANLA) raised its tracker Mortgage rates yesterday, pushing its two-year tracker mortgage product up by 0.25 percent, this comes despite the interest rate cut and the Libor rate falling.

The new Abbey tracker rate will be set at 2.24 percent over base interest rate currently at 2 percent. Previously the tracker was at 1.99 percent over base. However with the interest rate being cut if you took out this tracker you would pay 4.24 percent interest on your loan.

Abbey owned by Santander have also hiked up the lenders fee on the product from £995 to £1,495 you will also need a 25 percent deposit.

This hike comes despite the Libor rate falling 50 basic points last week, the Libor is the interest rate used for banks to lend to each other in the wholesale market to fund the tracker mortgages.

Source: Timesonline Breaking and Entering video