Hundreds of thousands of Northern Rock borrowers are facing huge rises in their monthly mortgage repayments because they are trapped in deals with the beleaguered lender.

In line with the business plan adopted when Ron Sandler was appointed chairman almost four months ago, the bank has scrapped attractive rates and tightened lending conditions to deter new customers and encourage existing ones to remortgage elsewhere.

However, not all customers have the option of leaving the nationalised lender. About 200,000 customers took out Rock's Together mortgage, which enabled homeowners to borrow up to 125 per cent of their property's value. As the credit crunch has worsened, lenders have pulled their most generous deals, leaving cash-strapped borrowers with nowhere to turn. Few lenders now offer deals above 95 per cent of a property's value and those that do are extremely uncompetitive.

This leaves thousands of Together customers with little option but to move on to the bank's standard rate of 7.49 per cent at the end of their fixed-rate deals. A homeowner who took out a £150,000 fixed-rate loan with Northern Rock at 6 per cent will see their monthly repayments rise by £186 on the bank's standard rate. Melanie Bien, of Savills Private Finance, a broker, said: “Unfortunately, people with 100 and 125 per cent loans who are coming to the end of the fixed-rate don't have much choice.”

At the beginning of June, Northern Rock announced a deal with Lloyds TSB to help its customers to remortgage. However, Lloyds TSB accepts applications only from Northern Rock customers with at least 20 per cent equity in their homes, and was accused of cherry-picking the lowest-risk customers. Even the Northern Rock customers who are able to remortgage face a much harsher market than the one they entered into two years ago. Mortgage rates have soared and the best rates are reserved for customers with the biggest deposits. The average two-year fix is at an 11-year high of 7.05 per cent, according to Moneyfacts.co.uk, the price comparison website. The best deal is from Skipton Building Society, at 5.79 per cent, but this is available only on loans of up to 90 per cent of a home's value.

The high cost of vanishing mortgage deals

SANDRA GEORGE, from Barry, Glamorgan, took out a two-year fixed-rate Together mortgage for 100 per cent of her property's value in October 2006. She has made interest-only repayments of £715 a month on the £135,000 loan from Northern Rock.

Ms George, a finance manager, is due to remortgage and contacted a broker after becoming worried about interest rate rises.

L&C Mortgages said she had no option but to repay 10 per cent of her loan and apply for a new deal at 90 per cent, the highest loan to home value ratio now available.

“The adviser said we didn't have much choice because there were no more 100 per cent deals around,” she said. I've had to scrimp and save to find £10,000 to make up the shortfall in the new deal. I would have had to save even more, but fortunately the house has slightly risen in value.”

Her new mortgage, with Abbey, costs £840 a month - £125 more than her previous deal. The rate is fixed at 6.05 per cent for five years.

Ms George, who lives with her partner, Spencer Robins, 30, thinks Northern Rock's attitude to existing borrowers has been irresponsible. “Borrowers haven't been given any options. There are going to be loads of repossessions because there are borrowers in far worse a situation than me.”

She believes that Northern Rock is not doing enough to help borrowers with high loan-to-value deals. “The pact with Lloyds TSB isn't going to help anyone because Lloyds TSB will only take people with 20 per cent deposits, and the people who need help the most are those borrowers who owe more than the value of their homes.”

GARY WYLIE, 26, and his wife, Rachel, 25, are keen to move to a bigger home, but Northern Rock will not extend their 100 per cent deal to another property.

The couple, who have one child, live in a two-bedroom flat in Glasgow. They have a 100 per cent Together mortgage from Northern Rock, in a five-year fixed-rate deal with an interest rate of 5.99 per cent.

When they took out the £128,000 loan in September 2006 the bank assured them that it could be transferred at any point during the five-year term. However, Northern Rock says that it will now allow only 90 per cent of their new home’s value to be covered by their mortgage.

Mr Wylie, a services manager, said that though the couple were told the loan was “totally portable”, they were being offered “a different product to the one we took out”. They would have to save an extra £30,000 to move.

CHRISTOPHER HAWKE, 28, faces a £130 rise in his repayments when he is forced on to Northern Rock’s 7.49 per cent standard variable rate (SVR) while he waits for his application to remortgage with another lender to be approved.

Northern Rock told him seven weeks ago that he would have to remortgage elsewhere or face moving on to its standard rate. “Borrowers were not given enough warning about the potential consequences of the nationalisation. Northern Rock has really let its mortgage customers down,” he said.

Mr Hawke, a housing support officer from Ashton-under-Lyne, had a three-year fixed-rate deal with Northern Rock at 5.79 per cent. The loan of £88,000 represented 90 per cent of his property’s value and his repayments stood at £553 a month.

For the next two months he will be paying £681 a month on Northern Rock’s SVR.

Mr Hawke has found a 90 per cent deal with HSBC, a lifetime tracker 0.79 per cent above the base rate. His new monthly repayments will be £563, an extra £120 a year, but increases in the base rate predicted later in the year will squeeze his finances.

“The increases in repayments have pushed me right to the edge of what I can afford,” he said.

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