Santander has written to customers informing them that it intends to increase its Standard Variable Rate from 4.24% to 4.74% from October 3.
The lender is also informing customers that the SVR Cap Margin – the maximum amount above the Bank of England base rate that it can charge – will rise from 3.75% to 4.99% from September 24.
A spokeswoman for Santander says: “This move is prompted by several factors – most notably the fact that for the last three years the amount it costs us to provide mortgages and the rates we offer our savings customers have been increasing despite the base rate remaining static. Indeed, for some time the correlation between base rate and mortgage and savings rates has been weakening. Additionally, the cost of running a bank in the UK has increased dramatically through a combination of increased liquidity, capital and funding requirements.
“Our analysis shows that our SVR mortgage holders will see an average increase of £26 per month for a £100,000 mortgage. We will consider all particular customer circumstances that might lead to financial difficulties as a result of this change. We will work with our customers on an individual basis and we have developed a programme to help them manage any impacts – consisting of payment holidays, waiving charges or even resetting mortgages as appropriate.”