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December 21, 2008    

Abbey cuts fixed rates again

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by Gill Montia
Abbey cuts fixed rates again

Abbey has cut the cost of its fixed-rate mortgages for the second time in a fortnight.

From 19th December, the lender’s two, three and five-year fixed-rate deals include:

A two-year fix at 4.64% with a maximum 75% loan-to-value (LTV) ratio. Up to £150,000 can be borrowed and a £549 fee applies.

A three-year fix at 4.64% and 60% LTV with a £995 fee, or at 4.89% for 75% LTV and a £995 fee.

A new range of five-year fixes includes a 4.94% deal with a £995 fee and 60% LTV; 5.09% with a £995 fee and maximum LTV at 75% and 5.84% with an LTV of up to 85% and a £995 fee.

The five-year fix is particularly aimed at first-time buyers and homemovers, hence the relatively high LTV.

However, it should be noted that last week Abbey altered its affordability calculations to take into account falling interest rates.

The lender has informed mortgage brokers that it will no longer use its standard variable rate, which is currently 5.44%, to assess affordability but a new figure of 7%.

The bank said it is keen to ensure that if and when interest rates rise, its borrowers can still afford their repayments.

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