Tuesday 12 December 2017

Mortgage rates at EBS to increase by 0.6pc

John Mulligan

John Mulligan

Building society EBS has become the latest lender to hike its mortgage rate even as the European Central Bank (ECB) decided this week to leave its key interest rate at a historically low 1pc.

EBS, which is set to be formally controlled by the State after it receives nearly €900m from the taxpayer, announced yesterday that it will tack on an extra 0.6pc of interest to its standard variable (SVR) mortgage rate from May 1.

That will result in the rate rising to 3.23pc equating to an annual percentage rate of 3.3pc.

The increase will add around €75 a month to repayments on a 25-year €250,000 mortgage. The EBS had said as late as the end of March it had no immediate plans to raise its SVR.

The lender is one of the country's biggest mortgage providers, commanding about a one-fifth share of the retail mortgage market. It also provides about 38pc of all first-time buyer mortgages.

The decision by EBS to lift its rate came as Bank of Ireland yesterday confirmed that it will raise its standard variable mortgage rate by 0.5pc from next Friday to bring it to 3.1pc.

That rate increase by Bank of Ireland was first revealed by the Irish Independent.

Dermot Jewell, head of the Consumers' Association of Ireland, has described Bank of Ireland's decision as "sickening".

AIB recently added 0.5pc to its standard variable rate to bring it to 2.75pc, and the institution is expected to inflict two further rate hikes on consumers before the end of the year.

Permanent TSB has already raised its rates twice since last summer and is charging hard-pressed home owners a 4.1pc SVR.

EBS yesterday maintained that the hike is justified because the rates it is charging its customers "no longer reflect the actual cost" to the society.


It added that while ECB rates have been decreasing, the cost of funds from other sources has "increased significantly" over the past 18 months.

It said that it is now in a position where it is charging less interest on its mortgages than it needs to pay in order to attract depositors.

"The cost of funds to EBS has been higher than the rates we have been charging to members for quite some time," said the institution's director of membership, Dara Deeling.

She added: "While we were reluctant to make any changes, there is a need to run the society in a manner that is sustainable and in the interest of all members of the society, and therefore an increase in rates became inevitable."

Irish Independent

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