Skipton building society has written to thousands of borrowers telling them it is dropping its promise to keep its main mortgage rate within 3% of the Bank of England base rate.

The society said it would be increasing its standard variable rate (SVR) from 3.5% to 4.95% from 1 March, which brokers estimate will add £180 a month to the cost of a £150,000 interest-only mortgage.

The move will immediately affect 29,000 borrowers. A further 35,000 who are currently on fixed and tracker rates could also move on to the higher SVR when their deals come to an end. The move is allowed under an "exceptional circumstances" clause contained in the society's mortgage offer letters, which also include the base rate promise.

Skipton said the high cost of mortgage funding and the fact the base rate had remained at a 315-year low since last March had forced it to invoke the clause in order to offer long-term good value and security to its 100,000 borrowers and 750,000 savers. It said it would be writing to all of its borrowers to explain the decision.