Abbey has hiked the rates on its tracker mortgages by up to 0.5%, effectively cancelling out tomorrow’s base rate cut.

Two-year trackers have increased from 5.79% to 6.29%, while three-year deals have risen to 6.19%.

Tracker mortgages are tied to the base rate, and with the Bank of England widely expected to cut rates from 4.5% to 4% tomorrow, many cash-strapped homeowners will have been hoping to secure a cheaper deal.

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Accusations of profiteering
Abbey’s decision will thus come as a bitter blow to many, and the lender will no doubt face accusations that it is merely using the cut as an opportunity to drive up profit margins.

However, Abbey claims it is merely responding to similar moves by its competitors.

The lender's announcement comes just one day after a warning by business secretary Lord Mandelson that consumers will be "surprised and disappointed" if the banks fail to pass on any cut in interest rates to their customers.

Abbey has also closed its doors to first time buyers, announcing that it will no longer consider tracker mortgage customers with less than a 25% deposit.

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