Friday 15 December 2017

EBS latest to increase interest on mortgages

Charlie Weston Personal Finance Editor

BUILDING society EBS will be the fourth lender to increase mortgage interest rates this year.

The society, which is effectively owned by the State, is to announce today that it is pushing up its standard variable rate by around 0.6pc, the Irish Independent has learnt.

And it emerged last night that Permanent TSB is to charge up to 9pc to a group of customers to whom it has a contractual obligation to offer a fixed rate.

The bank has suspended the option of fixing for the majority of its customers. But some customers who are at the end of a fixed rate have a clause in their contract that states they must be offered a new fixed rate after their current fixed period ends.

They will be offered 8.75pc if they want to fix for five years, a rise of 3pc from the rate offered the last time.

Permanent TSB, which is increasing its variable rates by 1pc from March 7, has effectively shut off the option of fixing, according to Michael Dowling of the Independent Mortgage Advisers Federation.

The two-year rate will rise from 5.25pc to 7.25pc. The seven-year rate will go from 6.1pc to 9.1pc, for those who have a 20-day option to fix again.

And Irish Nationwide Building Society has been told to stop issuing mortgages following a High Court order this week to wind down its operations.

EBS's standard variable rate will now go above 4pc, which will add almost €34 to monthly repayments for every €100,000 borrowed.

The higher rate will take effect next month. It follows rate rises by Permanent TSB, Ulster Bank and KBC Bank.

The order to stop issuing home loans follows this week's High Court decision to approve the merger of Anglo Irish Bank and Irish Nationwide's loan books and the sale of their €14bn deposit books.

Only in cases where firm commitments had been made to issue a mortgage would Irish Nationwide advance funds.

Head of mortgages Martin Noonan said that the company had some good quality borrowers on its books.


However, he would not comment on reports in this newspaper that more than a third of residential mortgages issued by Irish Nationwide are in arrears.

Around half of the buy-to-let mortgages issued by the society in the past few years are also in arrears.

Meanwhile, it has emerged that the Central Bank has written to all lenders telling them they must give mortgage holders at least one month's notice when increasing interest rates.

Lenders must mow spell out when the new rate applies, the details of the old rate and the revised monthly repayment.

It also emerged yesterday that 3,000 mortgage holders with KBC Bank have not paid their home loan for three months or more. This is up from 2,300 at the end of 2009.

The lender, which this week hiked its five-year fixed rate to 5.5pc for existing customers, has not ruled out a rise in its standard variable rate, which is 3.85pc.

Irish Independent

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