First time buyers hit by lender hikes

12-Sep-2007

Abbey has announced that it has raised interest rates tracker mortgages for new customers by between 0.1 per cent and 0.2 per cent, in a move that signals the start of an expected across-the-board series of increases from lenders.

Standard Life has also announced that it is to review its mortgage rates next week, with Abbey saying that its own increases were down to current market turmoil.

With the London Interbank Offer Rate (Libor) rising to a 20-year high of 6.88 per cent last week, lenders are now set to pass on the cost of borrowing to consumers themselves.

"These changes reflect moves in the market that have been experienced," commented Nici Audhlam-Gardiner, head of mortgages at Abbey, according to the Daily Telegraph.

"We expect that these current trends will be sustained over a significant period and that other companies will follow immediately." Ms Audhlam-Gardiner added.

First time buyers are already borrowing an average of 3.39 times their salary, the Council of Mortgage Lenders (CML) has reported – a new record.

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