Customers of Northern Rock who are locked into deals with the struggling lender now face the prospect of huge rises in their monthly mortgage repayments.

Four months ago when Ron Sandler was appointed the new chairman of the bank, a business plan was drawn up to scrap attractive rates and tighten lending conditions to discourage new customers and encourage hundreds of thousands of existing clients to re-mortgage elsewhere.

Unfortunately some 200,000 present customers are not in a position to leave Northern Rock after they took out the 125 per cent ‘Together Mortgage’, before the lender hit financial crisis. With the credit crunch worsening and firms abandoning some of their generous deals, many cash strapped borrowers have been left with nowhere to turn.

This has left thousands of people who took out the ‘Together mortgage’ with little option but to move to the bank’s standard rate of 7.49 per cent at the end of their fixed rate deal.

A homeowner who took out a fixed rate loan of £150,000 at 6 per cent with Northern Rock, will see a rise of £186 on their monthly repayments.