Abbey is to offer a guaranteed deal for the entire life of a mortgage, in return for an upfront fee.
In return for a fee of £1,000, customers will pay 0.50 per cent above the Bank of England base rate, which is guaranteed for the life of the mortgage. This gives a current rate of 4.25 per cent compared with Abbey's standard variable rate of 5.75 per cent.
Director of Abbey for Intermediaries Ambrose McGinn says: “Finding a way to reward existing customers, while at the same time, making upfront deals attractive to new customers, has challenged mortgage lenders for years. None of the solutions has really worked, often just causing problems.
“We think the changes we are making represent a genuinely new approach to making Abbey mortgages simple to understand and rewarding to keep. There is still a lot of work to do but we are committed to improving things for intermediaries and our customers.”