Mortgage payments will rise as Skipton hikes rates

SKIPTON Building Society is hiking up its standard variable rate (SVR), which will result in bigger monthly payments for tens of thousands of mortgage customers.

The UK’s fourth biggest building society blamed “exceptional market conditions” for its decision to raise SVR from 3.5 to 4.95 per cent. The move will see typical monthly payments on a 100,000 mortgage increase by 121 – or 1,254 a year.

Skipton said 29,000 borrowers would be affected when the new rate comes into effect on March 1. A further 35,000 borrowers are due to revert to SVR in the future.

The historically low Bank of England base rate of 0.5 per cent has made it difficult for building societies to attract new savers.

They have also faced increased competition for retail deposits and complained of market distortion, claiming that state-backed banks benefit from an uneven playing field.

Asked about the rationale for the rise, chief executive David Cutter said: “We have to act in the long-term best interests of the society as a whole.

“In terms of the exceptional circumstances we operate in, as a deposit taker in an extremely low interest environment, we need to pragmatically review what our SVR should be.

“We believe that where base rate has been for almost a year now, this the right thing to do in the long-term best interests of the society.”

He dismissed any question that Skipton Building Society was short of cash. “Far from it. We are carrying very high levels of

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