Three more lenders to follow BoI with rate hike
THREE more lenders are set to follow Bank of Ireland with hikes in mortgage rates, the Irish Independent has learnt.
Bank of Ireland said yesterday it was to hit homeowners on standard variable rates with a rise of 0.45pc, in a move that will add €60 a month to the cost of repaying a typical €250,000 mortgage.
The move will infuriate homeowners, with the European Central Bank (ECB) due to leave its key interest rate unchanged for the 15th month in a row when it meets tomorrow.
This latest hike, which takes effect next Tuesday, comes on top of a similar rise in April.
The two hikes mean it will cost an extra €600 over a full year in repayments for every €100,000 borrowed. A family that borrowed €300,000 over 30 years will now find it costs an extra €150 in monthly repayments following the two hikes.
Over a full year, the family will end up paying an additional €1,800 in repayments.
Almost 60,000 people will be impacted by the rise in variable rates at Bank of Ireland and its subsidiary ICS.
The bank is also making it more expensive for those who want to lock in to a fixed rate from next Tuesday.
ICS Building Society is pushing up its standard variable rate by 0.6pc and also increasing the cost of fixing.
Opting to lock into a fixed rate over five years with ICS will now cost close to 5pc.
Now AIB, which is set to report record losses today of €3bn for the six months up to March, will follow its rival with a hike in its standard rates in the coming days.
AIB's increase in standard variable rates is set to be followed by KBC Homeloans by the end of the month.
And Irish Nationwide Building Society will increase its standard variable rates early in the autumn, the Irish Independent has also learnt.
In the past few weeks, EBS Building Society increased its standard variable rate for the second time this year, while the third rise in Permanent TSB's variable rate in a year took effect yesterday.
It is understood that Ulster Bank, which has one of the more expensive standard variable rates, is not planning any hikes at the moment.
Almost 300,000 people have standard variable rates. Most people who bought a home in the last two years would have a standard variable rate.
Lenders can put up standard variable rates at will.
Bank of Ireland's head of consumer lending Brendan Nevin blamed the cost to banks of borrowing money on wholesale markets.
Mr Nevin said the bank had "no choice but to make this move to ensure we remain open for business".
But he said there would be no further rate rises this year, outside of the ECB hiking its key rate. The latest increases come despite the ECB keeping its key lending rate at 1pc for 14 months in a row.
Frank Conway, director of the Irish Mortgage Corporation, said the latest move on mortgage rates was counter-productive. "Ireland continues to suffer from a severe consumer recession. This rise will make mortgage repayments unbearable," he added.
And Labour's Ciaran Lynch accused banks of being hell-bent on "gouging ordinary families".