Ever since the rise of 0.5 per cent in base rates last December the Abbey, the second-largest mortgage lender in the UK, has been holding out against a rise, fearing it would damage the fragile housing market.
The largest building society, the Halifax, last week lifted rates by 0.25 points to 8.35 per cent. For a borrower with a £30,000 repayment loan, the monthly cost rises by £3.79 to £199.49. For a £60,000 loan, the increase is £8.83, to £440.73.
Abbey borrowers will move from the old rate of 8.09 per cent to the new rate, probably on 1 February. Charles Toner, managing director of Abbey National retail services, said: "We don't want to increase rates, but we have to react to competition on the savings side."
After recent rises, rates stand at: Halifax 8.35 per cent, Leeds 8.39, Nationwide 8.44 (from 1 March for existing borrowers), Bradford & Bingley and National & Provincial 8.45.Reuse content