Abbey cuts cost of fixed-rate loans

Abbey is cutting the cost of its two and three-year fixed-rate mortgages by up to 0.15% this week.

From today, rates on a two-year fixed loan start at 6.34% with £999 fee and on a three-year fix from 6.29% (minimum loan to value ratio LTV 75%).

The lender has also added a new three-year fix to its range, at 70% LTV. Interest is charged at 5.99% on a maximum value of £250,000 and a £1,695 fee applies.

According to Abbey, even when the hefty fee is taken into account, the product is a market leader.

The lender has now cut rates twice in a fortnight, having recently reduced interest on its 75% loan-to-value fixed-rate and tracker loans by up to 0.2%.

The news from Abbey comes as latest research from Moneyfacts.co.uk shows that the cost of a fixed-rate mortgage has continued to rise despite a fall in money market swap rates.

Earlier this month, the financial website reported that the average rate for a three-year fix now stands at 7.25% (up from 6.47% in June), while the average rate on two-year fixed deals has risen to 7.07% (up from 6.52% in June).

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