LONDON (Reuters) - Abbey has raised rates on some fixed-rate mortgages by up to 0.44 percent on the back of rising borrowing costs, just a week after announcing more rate cuts to lure new customers.

The move has already prompted criticism from industry watchers, who say it adds to confusion in an already volatile and uncertain mortgage market.

Abbey said on Wednesday, however, that it was responding to a "dramatic increase" in interest rate swaps last week, when hopes of a further rate cut were dampened by the Bank of England's bearish prognosis on British economic prospects. The swaps are a derivative contract whose moves broadly reflect changes in interest rate expectations and the cost of borrowing.

Abbey, owned by Spain's Santander, said its core five-year fixed rate deal for borrowers looking for up to 75 percent of the property value -- cut by 0.17 percent last week -- was up 0.44 percent at 6.19 percent.

"Because we cut rates last week, even with these increases our fixed rate deals are still competitive," an Abbey spokesman said in a statement.

The bank said it had separately brought in new tracker rate deals -- which mirror rate moves -- and held rates on other tracker and flexible mortgage products.

Abbey has said since early this year that it plans to cut rates to attract new clients, as rivals are forced to retreat n the face of a credit crisis and deteriorating outlook. It took an almost 16 percent share of the UK mortgage market in the first quarter, almost double the previous quarter.

But its effort to build market share has prompted criticism.

"While swap rates have risen by around half a per cent in the past month which could justify this hike, Abbey is only adding to confusion and volatility by reducing rates on fixed deals last week only to raise them again this week," Louise Cuming, head of mortgages at price comparison site moneysupermarket.com said.