Wednesday 16 August 2017

Subprime lender now charging top rate after 1pc rise

A rate of 9.45pc translates into monthly repayments of €809 on every €100,000 borrowed over 30 years. Photo: Thinkstock
A rate of 9.45pc translates into monthly repayments of €809 on every €100,000 borrowed over 30 years. Photo: Thinkstock

Charlie Weston and Laura Noonan

SUBPRIME lender Springboard Mortgages, which is owned by Permanent TSB, is increasing its variable rates for existing customers by a full 1pc.

Springboard's highest rate will go from 8.45pc to 9.45pc -- the most expensive variable rate in the market, the Irish Independent has learned.

Customers are charged a range of interest rates depending on how risky it judges a borrower to be.

A rate of 9.45pc translates into monthly repayments of €809 on every €100,000 borrowed over 30 years.

That is more than double the variable rate charged by most mainstream lenders.

One customer told this newspaper the increase will see his borrowing rate rise to 6.85pc, and his monthly repayments go up by €165. His repayments will be €1,479 on a €241,000 mortgage.

The new rates will come into effect on April 1, and follow a recent announcement from Permanent TSB that its standard variable rate will rise by 1pc to 5.19pc from Monday.

Subprime lenders sprung up during the economic boom, offering mortgage credit -- to borrowers who were refused by mainstream lenders -- at much higher rates to reflect the risks they were taking on.

A spokeswomen for Springboard said: "While we cannot write off loans or arrears, we are committed to sitting down with any customer who does find themselves in difficulty with a view to agreeing a revised repayment plan."

The Central Bank said yesterday it does not regulate interest rates charged by lenders while a spokesman for Start Mortgages, the largest subprime lender in the market, said it had no plans to raise its variable rate. Its variable rates for existing customers range between 3pc and 7pc, it is understood.

Meanwhile, Springboard's parent company Permanent TSB said that 11,500 of its residential mortgage holders were in arrears.

Total arrears increased by almost 50pc on the group's Irish mortgage book.

Chief executive of the bank's parent group, Irish Life & Permanent, Kevin Murphy, said 11,500 mortgage holders were in arrears for more than 90 days -- almost 7pc of its mortgages.

Asked about the potential for debt forgiveness, Mr Murphy said that a "deferred interest" scheme was the bank's preferred route.

IRish life agm: See business

Irish Independent

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