Monday 19 March 2018

Fifth lender piles on pain with mortgage rate hike

Charlie Weston Personal Finance Editor

A FIFTH lender announced a hike in mortgage rates for existing and new customers yesterday -- leaving just one more mortgage lender now expected to hit homeowners with a rate rise.

KBC Bank said customers with a standard variable-rate mortgage will see the rate rise by 0.2pc from September 1.

It is the second time this year that the Belgium-owned lender has increased the rate.

Other lenders that have already announced their second rate rises this year are EBS and its broker division Haven; Bank of Ireland and its ICS division; and AIB. Permanent TSB pushed up its variable rate last month -- for the third time since last summer.

Irish Nationwide Building Society's head of mortgages Martin Noonan said the lender had no immediate plans to increase its variable rate.

However, market watchers expect the building society to follow with a rate rise in September.

Ulster Bank and National Irish Bank are not expected to increase standard-variable rates, while Bank of Scotland (Ireland)/Halifax mostly has tracker-rate mortgages.

Up to 300,000 homeowners have standard-variable rates, leaving them vulnerable to increases by their lenders.

However, in the past few months, there has been a jump in the number of borrowers who are opting to fix.

Lenders can move the interest rate they charge on variable-rate mortgages whenever they want but can only increase the rate they charge on trackers when the European Central Bank raises its rate.


The KBC Bank decision will see its variable rate move to 3.85pc.

The increase, which was signalled in the Irish Independent, will mean that a homeowner with a €200,000 mortgage over 30 years will be hit by a €24 rise in their monthly repayments.

Combined with KBC's decision in April to raise variable rates, it will mean a homeowner with this type of mortgage will have seen their monthly repayments go up by €66 a month this year alone.

Over a full year, it will mean an additional outlay of €792 on their mortgage.

Head of mortgages at KBC Bank John Delaney said: "The decision to increase our standard-variable rate reflects the continuing high cost of attracting funds to support the mortgage market in Ireland.

"KBC Bank Ireland has sought to limit as far as possible the impact on our customers by delaying the introduction of these new rates until September 1 and we remain fully committed to offering a competitive choice to Irish homeowners."

The lender confirmed that there will be no increase in its fixed rates for those who opt to lock into a rate.

It offers a three-year fixed rate for existing customers at 3.99pc and a three-year rate for new customers of 3.69pc.

Bank of Ireland boss Richie Boucher reiterated yesterday that his bank does not expect to increase rates again this year.

A similar commitment was given by AIB last week.

However, mortgage brokers said lenders could move again next year to raise variable rates further.

Irish Independent

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