Savers looking for high-paying fixed rate deals are pushing up the cost of mortgages.
That's what the Co-operative Bank says after announcing a half per cent jump in its Standard Variable Rate (SVR) for 54,000 mortgage borrowers.
The Co-op isn't the first to push up SVR. Halifax and Bank of Ireland set this ball rolling a few weeks ago.
Several have blamed the rising cost of raising money from savers and international lenders to fund their mortgages.
Now Co-op Bank says canny savers looking for high fixed rate accounts are driving the increase.
A spokesman said its mortgages are "predominantly funded through our retail savings".
And that they "are increasingly seeing a trend for savers to opt for longer term, fixed rate savings products, which typically pay higher rates of interest".
The "knock-on effect" is that mortgage interest rates have to go up.
The Co-op's variable interest rate on its Cash ISA is just 0.5%. In contrast, it offers a 2.49% fixed interest rate for one year deposits and 3.29% for 3 years.
The SVR for mortgage borrowers is being raised from 4.24% to to 4.74%.