Abbey axes 100% UK mortgage offer, joins retreat

LONDON (Reuters) - Abbey, the British mortgage bank owned by Spain's Santander (SAN.MC: Quote, Profile, Research, Stock Buzz), will this week stop offering 100 percent mortgages, joining all its major rivals in requiring at least some deposit from borrowers.

Abbey said it would also raise its mortgage rates and simplify its range as it joins a long line of banks and building societies to toughen up lending criteria in recent weeks.

Offers have been withdrawn and rates raised as banks have scaled back asset growth as funding costs have jumped following the global credit crunch and the economy worsens.

"Abbey is seeing high demand following recent competitor moves," the lender said in a statement. "In order to maintain high service levels on the business it writes, it is simplifying its mortgage range and repricing in some areas."

Abbey said the maximum mortgage it will offer will be 95 percent of the value of the property. In the past lenders such as Northern Rock had offered mortgages of over 100 percent of a property's value, but now all major lenders require some deposit. Market leader HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) on Monday cut its maximum to 95 percent from 97 percent.

(Reporting by Steve Slater, editing by Will Waterman)