Abbey will 'protect' savers from cuts

Abbey National, Britain's second-biggest mortgage lender, said yesterday it will not be passing on the full benefit of any future bank base rate cut to 500,000 borrowers tied in to its old standard variable mortgage rate.

Its stance could bring it into conflict with the Treasury, which is concerned about lenders not passing on the full base rate cuts. If the Bank of England does cut rates by a quarter-point today, Abbey said it would only cut its own rate - now 6.75% - by about a tenth of a point, to "protect" its savers.

In 1999, Abbey, Halifax and others were criticised for failing to pass on official interest rate cuts to mortgage-holders.

"Abbey's mortgage rates are at their lowest in 30 years, and it is the mortgage customers who have reaped the benefits," said a spokeswoman.