Abbey blames rate rise on markets

Abbey has become the first UK High Street bank to raise its mortgage rates as a direct result of the continuing turmoil in the financial markets.

The lender has increased the interest rates of its tracker mortgages for new customers by between 0.1% and 0.2%.

Abbey said it was responding to the current "market pressure", adding it expected its rivals to follow suit.

A global credit shortage has made it more costly for banks to borrow funds, making higher mortgage rates likely.

"These changes reflect moves in the market that have been experienced," said Abbey's head of mortgages Nici Audhlam-Gardiner.

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