Co-op hikes home loans for 54,000

AROUND 54,000 borrowers with the Co-operative and Britannia will be hit with a mortgage increase from next month. The bank is increasing its standard variable rate (SVR) from 4.24 pc to 4.74 pc from May 1.

It means someone with a £150,000 mortgage would see monthly payments jump from £812 to £854, a £42 increase.

The bank blamed ‘ the increased cost of funding’ mortgages, partly fuelled by the crisis in the eurozone.

Aaron Strutt, a broker at Trinity Financial, says: ‘Borrowers on SVRS can see their interest rate go up at any time — even if the Bank of England base rate has not increased.

‘If potential rises are worrying you, consider opting for a fixed mortgage rate, or a tracker pegged to the base rate, to guard against further shocks.’

The Bank of England base rate has been on hold at a record low of 0.5 pc for the past three years. Yet High Street names such as Halifax, Yorkshire Bank and Bank of Ireland have recently also increased their SVRS.

The Co-op says customers with less than 10 pc equity — who are therefore unable to remortgage elsewhere on to a cheaper deal — can lock into a fiveyear fixed-rate at 4.24 pc, with no fees, in order to guard against any further rate increases.

David Hollingworth, associate director at broker London & Country, says: ‘Co-op is far from being the first to increase its SVR. This arbitrary adjustment is fast becoming a trend that will force many borrowers to switch to a better deal.’