Co-operative Bank hikes its mortgage rate

THE Co-operative Bank has become the latest UK bank to raise its standard variable mortgage rate (SVR) by half a percentage point in the face of higher costs.

The rate will go up from 4.24 per cent to 4.74 per cent on 1 May – raising mortgages an average £15 per month for around 54,000 borrowers.

Although the Bank of England base rate is still at a record low of 0.5 per cent, Co-op said available mortgage funds had been hit by savers, who are choosing to lock in their money to get top interest rates.

“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,” a Co-op spokesman said.

The Co-operative Bank is the latest in a string of lenders to lift its SVR. The Halifax’s rate will rise from 3.5 per cent to 3.99 per cent at the beginning of May, Clydesdale and Yorkshire banks will raise their SVR from 4.59 per cent to 4.95 per cent at the same time while the Bank of Ireland’s UK arm, which includes Bristol & West, will hike its SVR from 2.99 per cent to 3.99 per cent in June, then to 4.49 per cent in September.