Co-operative Bank customers face mortgage rises

 

Around 54,000 customers at the Co-operative Bank are facing a rise in mortgage payments after the mutual became the latest provider to push up its cost of lending.

The Co-op Bank said it will lift its standard variable mortgage rate by 0.5% to 4.74% from May 1, meaning payments will typically go up by around £15 a month, or £180 a year.

The average borrower has a remaining balance of £48,000 and 11.5 years left on their term and would see their monthly repayment increase from £440 to £455 a month.

Higher funding costs and the weak economy were blamed for the increase, which follows other mortgage rate rises from Clydesdale and Yorkshire banks, RBS-Natwest and Halifax.

The hikes, which come despite the Bank of England maintaining the base rate at a historic 0.5% low, have previously been branded "shocking" by the Consumer Action Group.

The Co-op Bank said it recognised that some customers who have a higher loan-to-value (LTV) on their mortgage may be "particularly concerned" about the change and measures have been put in place to offer alternative options.

The bank is launching a new product specifically for those customers with a higher LTV who are seeking an alternative, which is a five-year fixed rate mortgage, available at the same rate they currently pay.

The Co-op Bank also offers other products including fixed rate and tracker mortgages.

Clydesdale and Yorkshire banks will increase their standard variable rates (SVRs) from 4.59% to 4.95% from May 1, affecting 30,000 customers.

RBS-NatWest said it is pushing up rates on two of its products - the Offset and the One Account - by 0.25%, taking them to a rate of 4%, affecting around 200,000 customers.

Halifax announced that some 850,000 borrowers will see their mortgage costs increase as the SVR rises from 3.5% to 3.99% from May 1.

And the Bank of Ireland also announced that it is increasing its SVR, affecting 100,000 UK customers. It will raise the SVR on its mortgages to 4.49% from 2.99% in two stages.

PA

Comments