Skipton BS raises standard variable rate

Skipton Building Society is increasing its standard variable rate (SVR) from 3.5% to 4.95%.

The change is effective 1st March 2010 and will occur despite the base rate clinging to an all-time low of 0.5%

The lender has evoked “exceptional circumstances” clauses that allow it to remove an SVR cap of 3% above base rate as follows: “Base rate is less than or equal to 2.7%; base rate minus the UK average branch instant access savings rate (as published monthly by the Bank of England) is less than or equal to 2.5% for each of the three preceding months.”

Both currently apply and borrowers have already been informed of the change in writing.

The mutual claims its SVR has been significantly lower than those of many other lenders and says the hike will still leave it below the average SVR of the top 10 UK building societies, which is currently 5.12%.

Building societies have been struggling to compete with banks since the the credit crisis brought regulatory changes that require lenders to hold more capital.

They are limited in the ways in which they can raise funds and have been complaining of unfair competition from banks bailed out by the taxpayer.

Last month, the Building Societies Association called the Government to create a “level playing field” in the UK’s financial services sector.

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