Hundreds of thousands of mortgage borrowers with Bradford & Bingley - Britain's second largest building society - will see their home loan costs rise by 0.5%.

About 343,000 mortgage borrowers will be required to pay the new variable rate of 8.25% from Sunday, February 1.

The society said the increase reflected rate rises by the Bank of England in August and November last year.

Borrowers who have been with the building society for less than two years will pay 8.45% while the rest will be subject to an 8.25% rate.

The banks, including the converted building societies, generally offer mortgage rates of 8.7%.

Nationwide, the UK's biggest building society, has pledged to keep its variable home loan rate at 8.1% unless base rates change.

Bradford & Bingley said the interest rate on its telephone-based mortgage service, Mortgages Direct, goes up to 7.79% also from February 1.

It said interest rates for its savers had been increased twice ahead of the mortgage rate rise.

The company's chief executive, Christopher Rodrigues, said: "We continue to demonstrate to both our savers and borrowers the benefits of being with a building society."
 

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