HBOS, the biggest lender, is continuing to pummel borrowers by increasing its standard variable rates (SVRs) by more than the base rate rise. While many lenders have passed on the quarter point rate rise to borrowers, The Mortgage Business and Bank of Scotland, both owned by HBOS have today increased their rates by 0.35 percentage points to 7.94 and 7.85 per cent respectively. These are among the highest SVRs on the market.

If.com, the online arm of the HBOS, increased the SVR for borrowers on a fixed-rate deal by 0.45 percentage points to 7.1 per cent earlier this week. Last week it increased the SVR for offset custumers by 0.35 percentage points. But Halifax, the best known arm of HBOS, only passed on the quarter point rise to borrowers, increasing its SVR to 7.5 per cent.

Melanie Bien, of Savills Private Finance, the mortgage broker, says: "This re-emphasises that anyone on an SVR or a discount deal which is linked to their lender's SVR need to think again about their mortgage. It is extremely hard for homeowners to budget if lenders are adding a premium as well as passing on the interest-rate rise, especially as it is the fourth interest rate rise in less than a year."

Millions of borrowers due to come to the end of fixed-rate deals this year will be forced to pay their lender's higher SVR unless they immediately switch to another fixed or variable rate deal. Experts say that borrowers should start looking around for a new mortgage deal at least six weeks before their current deal comes to an end as the new deals can take weeks to organise.

BACKGROUND

• HBOS drops £1.5bn on mortgage mistake

• Halifax shock as UK new mortgage business plunges

• HBOS hikes SVR, hits borrowers

• Shares in HBOS drop nearly 5% on cautious outlook

• HBOS cautious as bad debts hit £1.7bn

HBOS must be more measured

The bank insists that it moved promptly to reverse its lending practices when it saw that new lending was falling

Related Internet Links

• HBOS company information

• HBOS share price chart

• HBOS forecast

Borrowers who have a home loan with Standard Life Bank have also been dealt a blow. The lender has increased its SVR by 0.3 percentage points to 7.06 per cent for those who have borrowed less than 90 per cent of the value of their home and 7.26 per cent for those on loans of between 90 and 100 loan-to-value.