Abbey, a subsidiary of Banco Santander, is reducing the rate on its two- and three-year fixed rate mortgages by up to 0.25%, effective August 21, 2008.

The rates now start from the following with a GBP995 fee: two-year fixes from 5.89% at 70% loan-to-value (LTV); three-year fixes from 5.79% at 70% LTV; two-year fixes from 5.99% at 75% LTV; and three-year fixes from 5.94% at 75% LTV.

In addition, all Abbey’s flexible offset mortgages are reducing by 0.2%, so they now start from 6.23% with a GBP1,499 fee. The flexible mortgage comes with a savings pot to allow borrowers to offset savings against the money owed, reducing the interest charged and helping to pay the mortgage off early.

Three-year tracker products are reducing by 0.1% at 75% LTV, now starting from 5.79%, with a fee of GBP1,950.

Also, Abbey is reducing the rates on its fixed rate low loan, low fee mortgages, which are available for borrowing up to GBP150,000, starting from 6.04% for three years up to 6.29% with a GBP549 fee on a five-year fix.

Phil Cliff, director of mortgages at Abbey, said: These reductions demonstrate our continued effort to offer customers an excellent deal, in particular our flexible offset mortgages, which now start at 6.23%, look very competitive.