Mortgage costs leap as Skipton Building Society lifts rate

Tens of thousands of borrowers face a shock jump in mortgage payments after Skipton Building Society confirmed plans to raise its standard variable rate from 3.5 per cent to 4.95 per cent. The move, to take effect from 1 March, will raise mortgage repayments by up to 40 per cent for some borrowers, adding almost £200 a month to repayments on a £150,000 interest-only loan. Skipton, Britain’s fifth-largest building society, with 100,000 borrowers, previously had guaranteed that its variable rate would not rise while Bank of England base rate stayed at 0.5 per cent, but it has cited a clause in its loans’ small print allowing it to ignore the promise in ‘exceptional circumstances’. Skipton has blamed its decision on ‘unprecedented’ competition in the savings market from National Savings & Investments (NS&I), the Treasury-backed savings provider, and state- controlled banks. Experts say that other building societies are likely to follow suit and raise interest rates for homeowners on an SVR, the ‘revert’ rate that borrowers switch to when a mortgage deal ends.