Royal Bank of Scotland raises interest rates

The Royal Bank of Scotland today became the latest lender to announce it was passing on the recent hike in interest rates to its customers.

The group is increasing its standard variable mortgage rate by the full 0.25% to 6.54% from July 1 and is raising its savings rates by up to a quarter of a percentage.

On Friday HSBC said it was increasing its homebuyer rate by 0.25% to 5.49%, while Northern Rock became the first major lender to increase its rate by more than 0.25% and raised it by 0.3% to 6.59%.

The majority of the big lenders have now announced they will be passing on the hike, with Abbey National and first direct both saying they were increasing their rates on the day the Bank of England's Monetary Policy Committee announced it was raising rates to 4.5%.

Nationwide, Cheltenham & Gloucester (part of Lloyds TSB), Halifax, and Barclays and The Woolwich have all also announced increases. NatWest and Alliance & Leicester are still reviewing their rates.

A 0.25% increase in mortgage rates will cost someone with an average ?65,000 repayment mortgage around ?10 a month, increasing monthly repayments to ?438.88 based on a new rate of 6.5%.