The lender will temporarily remove its ceiling, which meant that customers would never pay more than 3% over the base rate.

The lender has blamed unusually expensive retail funding and unprecedented market conditions that have seen the Bank of England base rate remain at a low of 0.5% since March 2009 for the move.

The increase will also apply to the society’s specialist lending subsidiary, Amber Homeloans.

Skipton has also made amendments to their arrears payment charges. Under its new arrears charging policy, customers will pay a fee of £40 per month from the first month they go into arrears, rather than from the second month as they did previously.

David Cutter, group chief executive of Skipton, said: “UK Savers have been the forgotten victims of the credit crunch. But their money is now in hot demand as banks 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.

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“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.”