The Co-operative Bank announced today that it is raising the interest rates on its standard variable (SVR) mortgage by half a per cent from the start of next month.
From 1 May, the rate will increase from 4.24 per cent to 4.74 per cent, affecting some 54,000 mortgage-holders in the UK. For most householders with a Co-op SVR mortgage, this will mean £15 a month extra, or 180 a year.
The mortgage increase was widely expected by C-op customers following a similar decision to raise the rates of their SVR mortgages last month by the Halifax and the Bank of Ireland – whose UK arm including Bristol and West followed suit. Halifax will raise rates from 3.5 per cent to 3.99 per cent on 1 May, while the Bank of Ireland’s SVR is going up from 2.99 per cent to 3.99 per cent in June – ahead of another increase to 4.49 per cent in September this year. Furthermore, Clydesdale and Yorkshire banks have said they are increasing their SVR from 4.59 per cent to 4.95 per cent at the start of May.
Like the other lenders, the Co-op blamed higher wholesale funding costs, along with ‘changing conditions in the mortgage market,’ such as changes to the activity surrounding funds which are available for mortgages composed of savers’ deposits.
A spokesman explained that “We are increasingly seeing a trend for savers to opt for longer term, fixed rate savings products, which typically pay higher rates of interest, and have a knock on effect in terms of the cost of then providing funding for our mortgages.”