AIB expected to follow suit as BoI reveals interest rate rise
Published 13/08/2011 | 05:00
AIB is expected to move within days to hike its variable mortgage rates after Bank of Ireland said yesterday that rates would rise by 0.5pc next month.
Bank of Ireland consumers are also to be hit with higher overdraft, credit card and loan rates. Business overdraft and loan rates will also rise.
The bank said it would push up interest rates for variable rate mortgage customers by 0.5pc next month.
A family with a €300,000 mortgage will see their repayments jump by €90 a month from September 22.
The bank, and its subsidiary ICS Building Society, had held off from pushing through the two European Central Bank (ECB) rate rises this year to variable-rate customers.
But now that it has moved to pass on the ECB increases, the move is expected to be replicated by AIB.
This is despite the fact that economists believe there will be no more ECB rate rises for at least a year, with some believing that the next move could be a cut in the eurozone rate.
ECB bosses have been forced to reverse their policy of gradually rising rates because of the financial crisis in the eurozone.
The ECB hiked its main rate by 0.25pc in April, and again by the same percentage last month to take the eurozone lending rate to 1.5pc.
Bank of Ireland also said thousands of its credit card customers will be hit with interest rates rises of 0.5pc from October 17. This will mean the Twin card will have an interest rate of 22.8pc for purchases, with the rate on the standard credit card going to 21.6pc.
Personal overdraft rates will shoot up by 0.5pc from Thursday, August 25, with personal loan rates going up by 0.25pc from the same date.
The hike will see consumer overdraft rates jump from 14.8pc to 15.3pc. Students and graduates will not see their loan rates go up.
Earlier this year the bank started to impose charges of up to 28c per transaction on those who do not meet strict conditions to qualify for free banking on their current account.
Both business overdraft and loan rates are rising by 0.5pc later this month. The bank is also hitting buy-to-let investors with higher mortgage rates.
Already 5pc of BoI's owner-occupier mortgage holders are in arrears of more than 90 days -- up from 3.7pc at the end of December. It is anticipated that numbers in arrears will continue to rise.