Halifax standard variable rate to rise © REUTERSLuke MacGregor Some 850,000 borrowers will see their mortgage costs increase as the rate rises from 3.5 per cent to 3.99 per cent from May 1. The impending rises are thought to be due to the "significantly higher" costs of funding a mortgage in the current economic climate. The average balance of the customers affected is £67,500, meaning payments would increase by nearly £16.40 a month to £498.95 on a capital repayment mortgage with 15 years remaining. This equates to nearly £200 extra a year. The move comes after RBS-Natwest confirmed it is pushing up rates on two of its products - the Offset and The One Account - by 0.25 per cent, taking them to a rate of 4 per cent, affecting around 200,000 customers. The hikes come despite the Bank of England maintaining the base rate at a historic 0.5 per cent low and have been branded "shocking" by the Consumer Action Group. Halifax have said those wanting to transfer to a new product with itself or another lender will not incur an early repayment charge. It is offering fee-free transfers for borrowers wanting to switch deals and said a customer with a 60 per cent loan-to-value mortgage could apply for a two-year fixed deal at 3.49 per cent with no fee, for example. Halifax is writing to customers to explain the changes and said they will be given a clear breakdown of what they mean.