Monday 19 March 2018

EBS to pile pain on mortgage holders with rate rise

Charlie Weston Personal Finance Editor

THOUSANDS of homeowners are to be hit with another interest rate hike after EBS pushed up its standard variable rate by 0.25pc.

The move will add €45 to the monthly costs of repaying a €300,000 mortgage.

Most of EBS's mortgage customers have standard variables, unlike other lenders with large numbers of trackers.

The new rate would jump to 4.68pc and would take effect from August 1, EBS said.

This is the second time this year that EBS has hiked its variable rate. Its variable rate rose by 0.6pc from April 1.

EBS is due to be merged with AIB on July 1, but will be run separately.

It also emerged yesterday that Permanent TSB has followed its hike of 1pc in its variable rate at the start of the year with another increase in the past few weeks.

Permanent TSB's variable rate has gone up by 0.25pc following the move by the European Central Bank to push up its main rate by the same percentage in April.

Permanent TSB's standard variable rate for existing customers has shot up from 4.19pc at the start of the year to 5.44pc now. This is the highest variable rate in the market.

This means that repayments on a €300,000 mortgage have jumped by more than €200 a month since the start of the year.

Both Permanent TSB and EBS no longer allow their existing mortgage holders the option of fixing their rate.

Ulster Bank has also announced a second standard variable rate rise this year. It will take effect from July 1 and will see repayments for a family with a €300,000 mortgage increase by €100 a month.

The rate is to rise by 0.6pc to 4.95pc, making it the second highest variable rate in the market.

The ECB is set to raise its rates by another 0.25pc next month. This will be passed on to 600,000 homeowners who have both tracker and variable rate mortgages.

Each 0.25pc rise in rates adds €15 to the repayments on each €100,000 borrowed.

Many economists expect the ECB rate to hit 2.5pc by the end of 2012.

Meanwhile, Permanent TSB is to extend its offer of a financial bonus to tracker mortgage holders who pay a lump sum off their mortgage ahead of schedule.

The bank has only managed to get extra payments worth €53m, despite putting aside €500m for the scheme.

About 1,500 mortgage holders availed of the bank's scheme, with average extra payments of €35,000.

Under the deal, tracker customers who pay at least €5,000 off their mortgage get an extra 10pc of that sum paid off their home loan by the bank.

This means someone with a spare €90,000 would end up getting €99,000 wiped off their mortgage.

The offer was expected to close this week, but staff in the bank were told yesterday it would be extended until the end of August.

Some 60pc of Permanent TSB's 180,000 mortgage customers have trackers and the bank has been desperate to persuade people to come off them as they are costing the lender about €400m a year. The deal is open to tracker holders whether their mortgage is residential, commercial or buy-to-let.

Irish Independent

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