Abbey has become the latest bank to pass on some of the recent base rate cut of 0.5 per cent by cutting its 3 year fixed mortgage rate by 0.15 per cent.
The changes will take effect from today and will apply to Abbey's 70 per cent LTV three year fixed deal. The cut is in response to the fact that fixed rate deals continue to be the most popular despite the base rate cut of 0.5 per cent.
According to research from Abbey, more than half of homeowners would still opt for a fixed rate mortgage
. The findings also showed that three year fixed rate deals were the most popular with 23 per cent of homeowners choosing them.
The Abbey three year fixed mortgage rate will become 5.39 per cent from tomorrow with a £1,495 fee which, according to Abbey is a market leading deal.
The base rate cut has not yet been passed on by more than three quarters of mortgage lenders according to moneyfacts.co.uk. This could explain why there has been a decline in demand for tracker rate mortgages.
Commenting, director of Abbey Mortgages, Nici Audhlum Gardiner said: "The research suggests that borrowers are not willing to gamble on a rate cut, instead they are more likely to opt for a medium term fix which will provide them with some financial security in these uncertain economic times."
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