Now EBS follows rivals' lead with 0.6pc rate hike
BUILDING society EBS confirmed last night that it is increasing its variable rate by 0.6pc, in a move that will cost homeowners an additional €34 a month for every €100,000 borrowed.
The rate goes up from 3.83pc to 4.43pc with effect from Friday, April 1.
EBS blamed the high cost of funding for the rise, which will affect 49,000 borrowers.
The building society is unusual among lenders as 60pc of its mortgage holders are on variable rates, unlike other lenders where the majority have trackers, according to Karl Deeter of Irish Mortgage Brokers.
Lenders can hike variable rates whenever they want to, but can only increase tracker rates when the European Central Bank's key rate rises.
The ECB has not increased its key rate for 20 months.
Most lenders in this market complain that they are losing money on trackers as typical tracker rates were set at the ECB rate, which is 1pc at the moment, plus another 1.25pc. This means many people on trackers have rates as low as 2.5pc.
Dara Deering, director of membership business at EBS, said: "As the costs of funds to EBS continues to rise in international markets, EBS needs to take this step to ensure that our business remains viable."
The lender is now the third to increase its standard variable rate after Permanent TSB said its variable rate would rise by a full 1pc on March 7, and Ulster Bank said its rate was increasing by 0.5pc on March 1.
Increased
KBC Bank has increased its fixed rates, while Permanent's fixed rates have shot up by 3pc.
Permanent is not allowing the majority of its customers to fix, but a small number who are coming to the end of an existing fixed rate or an introductory discount deal will be given the option to fix at rates of up to 9pc. Brokers said this meant that Permanent TSB had effectively closed off the option of fixing for its customers.
Those on existing Permanent TSB fixed rates will be unaffected by the rate changes.
- Charlie Weston Personal Finance Editor
Irish Independent
