News that the Skipton Building Society has activated a relatively unknown get out clause in mortgage arrangements put in place since 2002 has caught the market by surprise. The decision to effectively rewrite all mortgage arrangements on the standard variable rate since 2002 will see the rate rise from 3.5% to 4.95%. But who will be next to follow?

Now that the Skipton Building Society has effectively broken the mould and in many ways damaged the "friendly" image of the building society sector, it seems only a matter of time before those in a similar position will rewrite their own mortgage arrangements. It is unknown for sure what other building societies may well have similar exceptional circumstance clauses included in their agreements but with the Skipton Building Society struggling we can safely assume that others will be finding it difficult as well.

Unlike traditional UK banks, UK building societies depend more upon savings deposits than their banking counterparts hence the need to attract as many savers as possible. The very fact that the sector has seen net withdrawals over each of the last 11 months is a concern and possibly one of the reasons which prompted the move by the Skipton Building Society. All eyes will be on the sector to see if this move is replicated by any more of the U.K.'s building societies.

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