Halifax follows interest rates cut with an increase

THE UK's biggest mortgage lender today hiked rates on its short-term deals by up to 0.5 per cent, despite last week's interest rate cut.

Halifax has increased the cost of its two-year fixed rate mortgages and trackers taken out through intermediaries by half a per cent, while rates for borrowers who take out a mortgage with Halifax directly are being raised by an average of 0.35 per cent.

However, there was better news for borrowers as high street bank Abbey said it would be passing on last week's interest rate cut.

The group said it was reducing its standard variable rate by 0.25 per cent to 7.09 per cent, while tracker rates for existing customers will also come down by a quarter of a per cent. But it is not passing on the full reduction to all new borrowers taking out a tracker.