Friday 20 September 2019

EBS arm to hike mortgage rates just two days before Christmas

Charlie Weston Personal Finance Editor

STATE-owned EBS Building Society played Scrooge yesterday when it admitted its subsidiary would hike mortgage rates for new customers with the new rate to take effect just 48 hours before Christmas Day.

Haven Mortgages, which is a division of EBS Building Society, shocked the mortgage market by announcing a hike in standard variable rate mortgages that will take effect on Thursday.

The move is set to add €32 a month to the cost of repaying a €300,000 mortgage and comes at a time when taxpayers are set to be hit with a raft of tax and other hikes contained in the Budget.

Property experts said the rise would act as a further disincentive to first-time buyers after the change in the Budget that will see 1pc stamp duty being charged on all property transactions.

Up to now, first-time buyers were exempt from stamp duty, but a 1pc charge will add €2,500 to the cost of buying a €250,000 home for a new buyer.

Other lenders are expected to wait until next year before they impose hikes in standard variable rate and fixed-rate mortgages for new buyers.

The expectation is that standard variable rates will rise by between 0.5pc and 1pc early next year.

Lenders are free to push up standard variable rates whether or not the European Central Bank changes rates in the eurozone.

Mortgage brokers accused Haven of acting like Scrooge by pushing up its variable rates by up to 0.2pc.


The lender, which sells mortgages to housebuyers through brokers, also said its fixed rates would become more expensive from Thursday. Haven insisted the hikes would not affect existing borrowers.

Karl Deeter, of Irish Mortgage Brokers, accused the EBS group of attempting to fatten its profit margins ahead of a deadline for the sale of the society on January 17.

Last week, the Government put another €525m of state cash into the EBS to enable the society to meet the Central Bank's end-of-year capital targets.

Final bids for the sale of the EBS group are not due until January 17. Bidders include a consortium led by Dublin-based Cardinal Capital -- whose members include US investment giant Wilbur Ross and the Carlyle Group -- and Irish Life & Permanent.

Mr Deeter said: "It seems that for Haven mortgage holders Santa is bringing a rate rise. This is unfair coming as it does so close to Christmas."

And he predicted that the rate rise was just the first of many from other lenders.

Standard variable rate mortgages are set to rise by as much as 1pc next year to an average of 5pc, the financial expert, who correctly predicted this year's increases, warned.

Mr Deeter produced a report in 2009 pointing out that standard variable rate mortgages would rise this year by 1pc.

Most lenders duly pushed up rates by that amount, with one lender imposing three rises in a 12-month period.

Irish Independent

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