EBS subsidiary Haven ups its variable mortgage rate to 4.7pc after loan losses
Published 22/06/2011 | 05:00
HAVEN, the mortgage brokerage channel for the EBS, has pushed up its standard variable rate to 4.7pc in a move that will cost typical homeowners up to €43 extra a month in repayments.
The rate rise comes as it emerged that the EBS subsidiary had to treble the amount of money it put aside last year to cover mortgage losses.
The lender has also put up the variable rates it charges investors to 5.19pc.
Residential standard variable rate customers will see their rate rise from 4.45pc to 4.7pc, in a move that will add €43 to the monthly repayments on a €300,000 mortgage over 30 years.
Haven, whose parent EBS is being merged into AIB, saw provisions for impaired loans more than treble to €17.3m over the year.
It has reported a loss of €6m for last year despite steps to improve margins.
The company said affordability levels for new homeowners were now at their keenest in 25 years.
Average mortgage repayments had fallen by 48pc over the past three years to €639 a month.
The company said interest income rose just over 15pc to €34.3m, mainly due to increased mortgage lending during 2010 and also because of a rise in mortgage margins.
At the operating level, Haven reported profits of €5m in 2010 before impairments, compared to a loss of €2m the previous year.
The company reduced operating costs in the year to just over €5m from €7.8m in 2009.
In a review of the business, the company said the brokerage market now accounted for close to a third of all EBS's mortgage business.
Established in 2007, when EBS finally agreed to deal with intermediaries in the mortgage market, the company said it now had a market share of 12.4pc, compared with about 10pc in 2009. It acknowledged that the market as a whole was contracting significantly.
"However, although reducing, it remains an active market," the company's directors stated.
The rise in market share "clearly demonstrates Haven's ability to remain competitive during a very challenging year".
But with directors expecting no economic recovery before 2013, Haven said in its accounts it was cautious in the outlook for growth in the mortgage market.
"This reduced level of repayments will take time to translate into mortgage transactions and, as a result, the mortgage market in 2011 is expected to be in line with 2010 levels."