The Society is temporarily removing the ceiling which previously meant that the majority of borrowers with SVR-linked accounts could not pay more than 3% over the base rate.
Skipton's new SVR, at 4.95%, will take effect from 1 March. This rate remains below the average SVR of the top 10 building societies (currently 5.12%). Letters are being sent to all affected customers this week.
This increase will enable the Society to maintain its track record, as a strong independent mutual, of offering long term good value and financial security to both its borrowers and its savers.
Skipton Group Chief Executive David Cutter said:
"Throughout 2009, the Society operated, by any historical measure, on an extremely low Standard Variable Rate (SVR), which helped our borrowers through the recession. At the same time, we tried to protect our savers from the effects of such unprecedented macro economic policy by offering them consistently high returns relative to an extraordinarily low base rate of 0.5%.
"Our duty for 157 years has been to act in the long-term best interests of all our members (savers and borrowers) and, with base rate expected to remain low for some considerable period, we have reviewed our low SVR.
"We have approximately 750,000 investing members to our 100,000 borrowers. UK Savers have been the forgotten victims of the credit crunch. But their money is now in hot demand as Banks (in particular those that have been nationalised or part nationalised) continue to reduce their reliance on the wholesale markets.
"This, coupled with the rates payable by the Government's NS&I, has driven up the cost of retail funding to an unprecedented level relative to mortgage rates."
At the same time, the Society is committing to voluntarily re-introduce the SVR ceiling in the future, once these exceptional circumstances no longer prevail. We will regularly update our members via our website and other means regarding our progress towards this goal.
Mr Cutter added:
"Skipton is one of the UK's most popular building societies because it strives to place its members at the heart of everything it does, rewarding them with consistently attractive rates on their mortgages and savings, as well as excellent, personal service. We must continue to do so.
"We have maintained the strength of the uniquely diversified Skipton Group throughout some of the worst trading conditions the UK has ever seen and will continue to do so by responding pragmatically - and at the appropriate time - to ongoing developments in the economy and the financial services marketplace that impact upon our business.
"While we understand this change will be unwelcome for those borrowers who will end up paying more as a result, we hope that they will understand it is a necessary step that is in the best interests of our membership as a whole, and indeed the Society itself, in the long run."
The increase will also apply to the Society's specialist lending subsidiary, Amber Homeloans Limited.
