Like all lenders Standard Life has seen its costs rise in recent months

Standard Life is the first mainstream lender to increase its mortgage rates despite the Bank of England leaving interest rates unchanged this month.

Standard Life said its standard variable rate (SVR) will rise by 0.15 percentage points to 7.46% on Monday.

Other lenders could now follow suit, analysts said.

'Significant changes'

The move by Standard Life will affect customers whose mortgage is linked directly to the SVR. Until recently such deals represented a large part of Standard Life's business.

This is a stark warning for anyone on an SVR rate or, indeed anyone with a rate linked to the SVR Julia Harris, Moneyfacts

However, today the majority of its current mortgage deals are linked to a tracker product instead of the SVR.

A tracker mortgage automatically follows the Bank of England base rate, and as a result cannot be raised unless the central bank also puts its rates up first.

But many customers on tracker mortgages are due to switch to the SVR when their deal period ends, as will many customers with fixed-rate mortgages.

Any borrowers who have chosen to add arrangement fees to their mortgage loan will also see their payments rise as Standard Life levies interest on such fees at the SVR.

The average cost of funding for lenders has been going up steadily over the last 3 months and has now reached a peak Ray Boulger, John Charcol

"The change in SVR is a consequence of significant changes to the mortgage market in recent months," a Standard Life spokesman said.

He added that Standard Life's SVR remains "very competitive" and below the current industry average, which financial comparison company Moneyfacts puts at 7.62%.

Possible rate cut

A number of so called "sub-prime" lenders, which focus on clients with poor or non-existent credit histories, have already increased their standard rates in recent months, but Standard Life is the first mainstream lender to move.

Julia Harris from Moneyfacts believes all borrowers should be on their guard.

"This is a stark warning for anyone on an SVR rate or, indeed anyone with a rate linked to the SVR, as with many discounted rates," she said.

"SVR is a managed rate, controlled by the lender, and it can and does move when base rate is stable," she added.

Ray Boulger from mortgage brokers John Charcol says all lenders are feeling the effects of a global credit squeeze, where problems in the US are making lenders more cautious with their cash.

"Conditions in the wholesale money markets mean the average cost of funding for lenders has been going up steadily over the last three months and has now reached a peak," he said.

Mr Boulger agreed that while some lenders may now follow Standard Life, many others would simply wait for the Bank of England's interest rates to fall and not pass on all of the cut to consumers.