21 July 2010 Last updated at 09:18 ET

Clydesdale and Yorkshire mortgage error hits repayments

The Clydesdale Bank apologised to customers for the situation

Thousands of Clydesdale and Yorkshire Bank customers face increased mortgage payments after a miscalculation error.

About 18,000 variable and tracker rate customers are being contacted about the changes, believed to range from less than £25 to hundreds of pounds a month.

The banks, which are both owned by National Australia Bank, said the error was "exacerbated" by last year's unprecedented falls in interest rates.

The banks appear to have miscalculated capital repayments.

This led to the banks collecting less than the minimum monthly payment required for customers to pay their mortgage within their agreed term.

Affected customers were underpaying on capital repayments and now have a shortfall on their accounts.

A Clydesdale Bank spokesperson said: "First and foremost we are very sorry that this error has happened."

The banks have written to affected customers to apologise and suggest ways to remedy their accounts.

Clydesdale said that for about half of the customers who have been underpaying the total suggested increase was less than £25 a month.

Steve Reid, retail director for Clydesdale Bank, said: "We would like to reassure mortgage customers that they need take no action unless they have received a letter from us.

"The vast majority of our customers are not affected".

Avril Simmons, 55, of Doune, Perthshire, told the BBC Scotland news website: "I received a letter from Clydesdale Bank telling me that they had made a mistake in their calculations when the mortgage was initially taken out and I would now face increased monthly payments.

"The tone of their second letter, after I had written to complain and demand they take the financial responsibility, was very patronising and they effectively tried to put the blame on me.

"I responded saying it was the bank who were not facing their responsibilities as they had been employed by me in a professional capacity, and I had trusted their integrity."

She added: "I hope this exposure forces the banks to admit responsibility."