Co-operative raises mortgage costs for 54,000 borrowers
Bank joins Halifax, Bank of Ireland and Clydesdale and Yorkshire banks in raising its standard variable rate, which will rise to 4.74% in May
The Co-operative Bank has become the latest lender to increase the standard variable rate (SVR) it charges mortgage customers, in a move that will affect more than 54,000 households.
The bank, which will increase its SVR by 0.5 percentage points to 4.74% from 1 May 2012, blamed changing conditions in the mortgage market and the increased cost of funding for the rise, which will add £42 a year to the cost of a £100,000 mortgage on an interest-only basis.
In a statement it said the average increase for customers would be £15. “Our SVR mortgages continue to offer customers a range of features and benefits, including the ability to make unlimited overpayments and to switch to another mortgage deal with us without penalty.
“These products are increasingly popular due to the flexibility they afford and the uncertainty about the direction of interest rates.”
The Co-op follows a string of lenders including Halifax, Bank of Ireland and Clydesdale and Yorkshire banks who have increased their SVRs despite there being no change in the Bank of England base rate.
The moves have led to warnings that some borrowers may be unable to avoid higher monthly payments as tightened lending criteria and/or a change in their circumstances mean they are unable to remortgage to better deals.
The Co-op said it recognised that customers with high loan-to-value (LTV) mortgages may be “particularly concerned” about the price rise, and said it would be launching a five-year fixed-rate deal specifically for existing customers with a LTV of 90% or above who wanted to switch away from the SVR. This deal, which has no fees, will be fixed at 4.24%.