Halifax is to give goodwill payments to thousands of customers after admitting 'confusing' them over mortgage payments.

The bank, which is now part of the Lloyds Banking Group, raised the cap on its standard variable rate (SVR) from 2 per cent above base rate, to 3 per cent above based rate in January 2009.

The cap only applies to borrowers who are paying the SVR and have an early repayment charge. However, this was not made clear in paperwork provided with mortgages given between September 2004 and September 2007.

The bank informed those customers that were covered by the cap about the changes. But many customers wrongly believed they were also covered by the cap as a result of the paperwork they received.

Now the bank admits it was not clear enough with its customers and has struck a deal with the Financial Services Authority, promising to 'review and redress' the situation.

Customers who were covered by the cap will receive £250 while those who weren't but thought they were will receive a discretionary payment.

'Many Halifax customers will have missed out on cheaper mortgage payments because Halifax changed its SVR cap when interest rates fell to historic lows,' says Melanie Bien, director of independent mortgage broker Private Finance.

'While Halifax reserved the right to make this adjustment in its terms and conditions, the fact that many borrowers were not aware of it because it wasn't in the offer documentation they received, leaves Halifax on shaky ground.

She adds: 'Borrowers may have chosen a different mortgage at the time if they had known, so Halifax must now compensate them accordingly.'

Halifax is set to contact any customers who were affected by the rate increase without warning.