Santander’s Abbey hikes tracker mortgage rates
Abbey, the UK mortgage bank owned by Spain’s Banco Santander (SAN.MC: Quote, Profile, Research, Stock Buzz), said it would raise repayment rates on its tracker loans by up to 0.5 of a percentage point to new customers from Wednesday.
Abbey, the UK’s third-biggest mortgage lender in 2007, said the increase came in response to tracker rate rises by competitors including Nationwide and Northern Rock.
Analysts said the higher rates on tracker mortgages — which are set at a fixed margin over the Bank of England base rate — are designed to offset the impact on lenders’ profits of any further rate cuts by the central bank.
“Most lenders can’t afford to pass on further cuts, so they are effectively pre-empting the next reduction,” said Michelle Slade at financial services price comparison website Moneyfacts.
The BoE’s monetary policy committee, which on Oct. 8 slashed the base rate by half a percentage point to 4.5 percent in an effort to stimulate the flagging UK economy, is widely expected to cut again when it holds its next monthly meeting on Thursday.
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Tags: Mortgage Rates