Halifax, Abbey pile on rate pain

HALIFAX, Britain's biggest mortgage lender, today said it was raising its mortgage rates in response to the Bank of England's quarter-point base rate increase last week.

Halifax said it would be raising its standard variable rate from 5.5% to 5.75% from 1 December. Changes to savings rates will be unveiled later this month.

Earlier today, Abbey raised its rate by 0.21%, to 5.75%, from 12 November for new borrowers and 1 December for existing borrowers.

Northern Rock later announced it was increasing its standard variable rate mortgage by the full 0.25% to 5.74% with immediately effect for new borrowers and from December 1 for existing ones.

It added that its savings rates were currently under review.

Rivals including Nationwide, HSBC and Cheltenham & Gloucester - Britain's second-largest mortgage lender - raised their rates last week.

Some of these banks have chosen to pass on the pain of the rate rise to borrowers while delaying passing on higher rates to savers. Such action, known in the industry as 'gapping', can save a bank thousands of pounds a day.

Halifax, part of the HBOS group, has promised any change in savings rates will coincide with the rise in mortgage costs.

Click on the links above to see how your bank has reacted to the base rate change