Abbey and the Halifax lead the way as lenders raise their rates

Some of Britain's biggest mortgage lenders have raised their interest rates in response to continued turmoil on the world's money markets.

Abbey was the first to raise the rates on its range of tracker mortgages, by between 0.1 and 0.2 per cent.

The Halifax, the UK's biggest mortgage lender, followed suit and raised rates on its tracker mortgages by 0.2 per cent.

A global credit shortage makes it more costly for banks to borrow from each other. And this extra expense, it seems, is now being passed on to borrowers.

The first to feel the pinch have been those mortgage customers whose rates track the international money market rates rather then the Bank of England base rate, which remains steady at 5.75 per cent.

More pain may be in store for British borrowers. Standard Life said that in the light of the credit crisis hitting the money markets, it would be repricing its mortgage rates.

Alison Crawford, the marketing director at Standard Life, laid the blame for its decision squarely on "market volatility".

Ms Crawford explained: "We have seen significant changes to the money markets in the past few months and this has increased the costof borrowing internationally."