Thousands to pay more for mortgages in bank blunder

Around 18,000 customers with the Yorkshire and Clydesdale Banks – which are both owned by National Australia Bank – have been hit by the error which left them unwittingly paying less than they needed to.

Affected customers have now been asked to pay the correct monthly amount, plus an additional monthly sum to meet the shortfall on their variable rate mortgages created by the error.

While around half – some 9,000 people – have been asked to pay an increase of less than 25 a month, the rest face repayments of up to 300 a month over the remainder of their mortgage.

The banks have apologised for the problem which they say was made worse by the historically low interest base rates.

Yorkshire Bank confirmed some of its 7,500 affected customers plan to complain to the Financial Ombudsman Service.

One mortgage payer, writing on a forum hosted by website moneysavingexpert.com, said she had been asked to pay a shortfall of more than 3,000.

"They are asking for an extra 200 per month for the remaining nine years of our mortgage," she said. "This is in excess of 21,000. How is this possible?"

Peter Vicary-Smith, the chief executive of consumer organisation Which?, said: "It's unacceptable that customers who have been paying off their mortgage in good faith suddenly find they are behind in their repayments. For most people, their mortgage is their biggest financial commitment so this can have a huge effect on their finances."

He said Yorkshire Bank must ensure that no customer found themselves in financial difficulty.

A Yorkshire Bank spokesman said the "vast majority" of its mortgage customers were unaffected by the problem, while there were around 180 other customers who had not yet been told they had underpaid.

Bank director Dean Cutbill said: "First and foremost we are very sorry this error has happened and for any inconvenience it may have caused those customers affected.

"We are nearing completion on a mailing apologising to around 18,000 Yorkshire and Clydesdale Bank customers across the UK who have been affected by an error in how we calculated some of our variable rate mortgage customers' regular payments resulting in an underpayment occurring."

A Yorkshire Bank spokesman said the method used to re-calculate regular repayment figures produced inconsistent results in extreme circumstances, such as the interest rate decreases seen between October 2008 and March 2009.

Yorkshire Bank says it is working with customers to find the most "flexible" ways for them to meet the repayments and pay back the mortgage within the term originally agreed. Some are being offered extensions to the loan period.