A&L, which has 550,000 home loan borrowers, is one of the last of the big mortgage providers to increase mortgage rates following the previous interest rate rise in November.
The group, which converted to a public company last year, is raising its variable mortgage rate by 0.25 percentage points to 8.7 per cent, in line with other major lenders, from Monday for existing borrowers and from today for new customers.
It said it had delayed its response to the last bank rate increase on November 6 to avoid burdening borrowers with an increase in their mortgage payments just before Christmas.
The only other big mortgage lender not to have raised rates following the November rise is Bradford & Bingley Building Society.
Bradford & Bingley has in place a self-imposed ban on raising rates until the end of this month, when its home loan rates are thought bound to increase.
A&L spokesman Geoffrey Seymour said its 3.5 million savers would benefit from higher savings rates over the next few weeks.