Mortgage misery to deepen as third lender halts fixed-rate option
Published 23/02/2011 | 05:00
A THIRD lender has shut off the option for its customers of locking into the security of a fixed-rate mortgage.
Irish Nationwide Building Society said yesterday it was temporarily suspending fixed rates for its existing customers.
This means those coming to the end of an existing fixed rate or those mortgage holders on a standard variable rate at the moment will not be able to avoid future rate rises by choosing to fix.
The building society said those currently on fixed rates will revert to the standard variable rate when their contract ends.
In a statement, Irish Nationwide said: "This decision has been taken due to prevailing market conditions and the associated high cost of fixed funding and will be reviewed on an ongoing basis."
Asked if the lender had any plans to increase its standard variable rate from its current level of 3.75pc, a spokeswoman said there were no plans at the moment but it was constantly under review.
Offers to existing customers to fix will be honoured if documents have been received and stamped at Irish Nationwide head office by Friday.
Earlier this month Irish Nationwide was told by the High Court to stop issuing new mortgages.
Brokers said the State-owned building society had some of the best fixed rates in the market. It had offered 3.99pc over three years, and 4.80pc for those fixing for five years.
EBS last week suspended its fixed-rate options, while the majority of existing customers with Permanent TSB no longer have to option of fixing.
This means those on standard variables are vulnerable to their lender unilaterally increasing the standard variable rate.
Director of Irish Mortgage Corporation Frank Conway said lenders were now mistreating people on variable rates.
"The lenders are cornering existing standard variable rate customers and turning them into cash cows.
"They will continue to milk them to get all they can out of them," he said.
Already this year a number of lenders have increased their fixed rates including EBS, Ulster Bank and KBC Bank. And Permanent TSB, Ulster Bank and EBS have also increased their variable rates.