The Abbey bank, has explained its reasoning behind a letter sent to its flexible mortgage customers warning of the impact of lower house prices on their contracts.

The letters said to customers that if their home’s value had fallen, so that the amount borrowed was more than 90% of its value, then they could have to pay a lump sum to reduce it.

The letters, were in relation to Abbeys flexible mortgage range, which allow homeowners to borrow money up to an agreed limit in stages and pay it back early if they wish to.

According to the letters, customers who have had their credit limit reduced will be given three months to pay the difference.

After it sent the letters the Abbey said it had no plans to invoke the clause forcing borrowers to do that, however, it did not offer any guarantees that it would not do it in future.