Co-op Bank announces mortgage rate increase

| April 3, 2012 | 0 Comments
Co-op Bank announces mortgage rate increase

The Co-operative Bank has announced plans to increase its standard variable mortgage rate (SVR) by 0.5 percentage points to 4.74 per cent from 1 May.

The increase means that 54,000 mortgage borrowers will have to pay an average of £15 a month more on their mortgage.

The bank has increased its rates to help offset the higher costs of funding mortgages.

Changing conditions in the mortgage market also contributed to the decision, which will have the greatest effect on customers with a higher loan-to-value (LTV) on their mortgage.

The Co-operative Bank has therefore launched a new product to help customers with a higher LTV – a five-year fixed rate mortgage, available at the same rate they currently pay.

A spokesman for the Co-operative Bank said: “We are increasingly seeing a trend for savers to opt for longer term, fixed rate savings products, which typically pay higher rates of interest, and have a knock on effect in terms of the cost of then providing funding for our mortgages.”

Despite the Bank of England base rate remaining at just 0.5 per cent, several banks have already announced increases to their SVR:

Clydesdale and Yorkshire are increasing their SVRs from 4.59 per cent to 4.95 per cent on 1 May.

RBS-NatWest is increasing rates on its Offset Account and One Account by 0.25 per cent to 4 per cent.

Halifax is increasing its SVR from 3.5 per cent to 3.99 per cent, also from 1 May.

The Bank of Ireland is increasing the SVR on its mortgages to 4.49 per cent from 2.99 per cent in two stages by September 2012.

At the end of 2010, the Council of Mortgage Lenders estimated that around 1.8 million people had reached the end of their fixed-rate mortgage deal and moved on to their lenders’ SVR.

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