Santander has announced it will increase its standard variable rate (SVR) by 0.50% to 4.74% with effect from October, impacting on thousands of its customers.
The bank said the rate rise was a result of increasing costs such as high mortgage fund raising and operational expenses.
Santander is the eighth mortgage lender so far this year to increase its SVR, following the likes of Halifax and The Co-operative Bank.
It is believed that a borrower with a £100,000 mortgage would see their monthly repayments increase by nearly £30, equating to a rise of at least £300 a year.
A spokesperson for Santander said: "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."
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