Thousands of BofI customers hit with new interest rate hike
Published 12/08/2011 | 16:02
Bank of Ireland will increase interest rates for variable customers by 0.5pc next month.
The move will add about €60 onto a €200,000 mortgage from September 22.
Earlier this week, BofIchief executive Richie Boucher warned that the bank had not passed on the last two European Central Bank rate increases to customers.
Every 0.25pc rise in rates adds around €15 to the monthly repayments on every €100,000 borrowed.
Allied Irish Banks is expected to follow suit in the short-term and has said it is keeping its rates under review.
Already 5pc of BoI's owner-occupier mortgage holders are already in arrears of more than 90 days -- up from 3.7pc at the end of December.
And it is anticipated that arrears will continue to rise.
Anyone with a variable rate will have to be given 30 days' notice by their lender before repayments go up, under new Central Bank rules.
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.
While the ECB has not ruled out further interest rate increases, ongoing uncertainty about eurozone debt will make the move less likely.