Borrowers hit by another rise in mortgage charges

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by Kay Murchie

The credit squeeze has resulted in lenders having a lack of funds and many have increased their fees as a consequence.

There has now been a further round of price rises for new customers with Abbey, the UK’s third biggest lender, demanding larger deposits and charging higher initial fees.

Since January, Abbey has revamped its mortgage range 11 times.

Furthermore, Cheltenham & Gloucester has raised its fixed rate deals by up to 0.6%, and increased its tracker rates by up to 0.4%. Since the start of the year, Cheltenham & Gloucester has revamped its mortgage range 15 times.

Britannia building society has increased all of its interest rates by up to 0.75% for new customers.

The increase throughout its entire range of mortgage products means that the building society’s cheapest two-year fixed rate is now priced at a minimum of 7.29%. This has been one of the most popular types of deal among new borrowers.

Research shows there are just 4,100 different mortgage deals on the market, compared with 15,599 last July.

Earlier this month, the Bank of England cut interest rates from 5.25% to 5%. This is the third time since December that interest rates have been lowered.

Homeowners who have a tracker mortgage are the most likely to benefit from interest rate cuts.

Moneyfacts, the financial information service, said 35% of existing borrowers are on variable tracker rate mortgages and will have seen rates fall by 0.50% in the last 3 months.