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Halifax set to raise standard variable mortgage rate

Halifax is expected to raise its standard variable rate up from 3.5% to 3.99% from 1 May

Homeowners are set to suffer rising mortgage interest rates that will add almost £300 a year to the cost of a £100,000 home loan.

RBS-Natwest is pushing up rates on two of its products by 0.25%, while Halifax is expected to raise its standard variable rate on Sunday.

The hikes in cost come despite the Bank of England maintaining the base rate at a historic 0.5% low and are expected to raise concerns among thousands of homeowners who are already struggling to make ends meet.

An RBS spokesman said on Saturday that the rate rises would take effect from 1 May and apply to two of its products, the Offset and The One Account, affecting around 200,000 customers.

He said: “Over the last year the cost of funds at which we need to borrow at to fund our mortgage commitments has risen considerably.

“We have absorbed the cost during this period but have now decided to pass on some of this increase, 0.25% to our Offset and The One Account customers.

“For the majority of our Offset and One Account customers their new rate will be 4%, the same as our standard variable rate.”

Halifax is expected to push its standard variable rate (SVR) up from 3.5% to 3.99% from 1 May, affecting around 850,000 customers.

Such a rise would drive up repayments on a £100,000 mortgage by £24.31 a month or £291.72 a year.

Marc Gander, founder of the Consumer Action Group, said: “It’s shocking, it’s coming at a time when people need this thing least of all.

“This is a nice thank you gesture to all the lovely people who bailed them out.”

He said although some banks had recorded losses at the end of last month – Lloyds revealed losses of £3.5bn for 2011, while 82% state-owned RBS unveiled losses of £2bn – most were doing well.

“Banks have never had it so good,” Gander said. “They are doing fabulously well and it amazes me that they can’t decide to share some of the burden that the rest of us are sharing.

“If they are saying they have to pass on rising costs, why can’t they pass some of the good times on as well as the bad times?”

He said he thought it likely that other lenders may follow the rises announced this weekend.

“They reckon their customers are like sheep, and they themselves are like sheep,” he added.

“One takes the lead, and I am absolutely confident that the rest will see these guys get away with it so think they may as well follow.”

A spokesman for Virgin Money, which took over Northern Rock on 1 January after buying it for £747m, said it had no plans to change its standard variable rate (SVR).

The hikes are apparently due to higher costs of funding a mortgage in the current economic climate.

They come as families are being squeezed harder than ever by rising costs of living.

Among these are record high prices for petrol, announced on Friday – with the average cost of a litre at 137.44p, according to the AA, while diesel is up to 144.67p a litre, another new record.

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