Skipton's U-turn signals mortgage rates are on the rise

Its 100,000 borrowers were guaranteed that the society's standard variable mortgage rate (SVR), which homebuyers move to when their "special" deals come to an end, would never be higher than three per cent above base rate. Currently, 29,000 customers are paying a competitive 3.5 per cent. However, a further 35,000 are shortly due to join them, reverting two-thirds of customers on to an unprofitable deal.

The society says it can no longer operate on this basis, and is invoking an "exceptional circumstance" clause to wriggle out of the promise.

From 1 March, the SVR will rise to 4.95 per cent, pushing up monthly repayments on a 50,000 interest-only loan by 60, from 145.83 to 206.25; on a 100,000 loan by 145.84, from 291.66 to 412.50; and on a 150,000 mortgage by 181.25, from 437.50 to 618.75.

The society claims it is only falling into line with many of its competitors, who have been charging around 5 per cent or even higher for some time. Yorkshire Building Society's SVR, for example, is 4.99 per cent, and its broker subsidiary Accord has recently upped its rate to 5.99 per cent. The Scottish is charging 5.29 per cent.

However, the Council of Mortgage Lenders estimates that the average is 3.74 per cent, with organisations such as Nationwide, Lloyds TSB Scotland and the Cheltenham & Gloucester, which had 2 per cent base rate guarantees, charging 2.5 per cent. Nationwide has upped its SVR to 3.99 per cent for new borrowers, but has no get-out clause for other customers.

The worry for borrowers is that not only must they absorb this hike but many more to come, not least given last week's news of rising inflation.

Darren Cook of Moneyfacts said: "Lenders are going to have to concentrate on repairing their balance sheets and that will not be completed in 12 months. The credit crunch will take years to recover from."

Nevertheless, some borrowers will feel aggrieved and complain to the Financial Ombudsman that they are being treated unfairly. As the "exceptional circumstance" clause was included in their mortgage agreement, their only grounds would be that the phrase was never defined.

Mortgage brokers are advising borrowers to think seriously about remortgaging elsewhere, not least because the Skipton is offering them a 90-day window to exit their loan, during which it will waive all charges including a 120 admin fee. Being able to easily remortgage will depend on the amount of equity you have in your home. Those with less than 15 per cent to put down will struggle to better 4.95 per cent and will have to stay put.

Otherwise, Punter Southall mortgage adviser John Postlethwaite says: "I think there are strong arguments for locking into some of the five- year fixes currently on offer. There are various offers around 5 per cent, and when you think that the long-running average for base rate is 5 per cent, then it's hard to see how these won't offer good value over the coming years."

HSBC will fix your rate at 4.73 per cent for five years with a 999 fee, if you have a 40 per cent deposit. Yorkshire will fix at 4.99 per cent with a 25 per cent deposit and 495 fee.

But if you believe that the base rate will take some time to reach 3 per cent, then you should explore a tracker. If you can put down 35 per cent, you can track at 2.08 per cent over base with a First Direct lifetime offset tracker which has no early redemption charges.

This would cut your monthly repayments on a 50,000 loan to 107.58, saving 98.67 from March; save 198.36 with a 100,000 loan, costing 215.14; and finally, save 296 monthly with a 150,000 loan, costing 322.71 monthly.

However, you will have to pay remortgaging costs, including a survey, although First Direct will give you 400 towards legal bills.

The Woolwich has a similar deal, tracking at 2.13 per cent over base, although it has early redemption penalties during the first two years.

However, you only need a 30 per cent deposit, and the bank will pay your legal and survey remortgaging costs.