Abbey launches new 125% product

Abbey has confounded market expectations by announcing the launch of a new 125 per cent LTV product just days after it raised rates for some of its tracker mortgages.

The lender's earlier actions had been in step with market expectations - ie tighter lending conditions and a reluctance to extend credit - but this latest move has come as a surprise to say the least.

What's more, the loan is fully secured against property, making it the highest value deal of its kind on the market, and one described as a "lifeline" by Moneyfacts.co.uk.

"The extra money these loans can provide borrowers can be a lifeline in helping borrowers get on the property ladder, providing vital cash for stamp duty, legal fees and even essential home improvements," commented Moneyfacts mortgage expert Julia Harris.

However, Ms Harris did add that homeowners should be cautious over the possibility of negative equity.