TWO MAJOR Irish mortgage providers are set to increase their interest rates over the coming weeks, only a day after the European Central Bank said it would keep interest rates at a record low.
EBS building society is to raise its mortgage interest rates from May 1st, while Bank of Ireland is to increase its mortgage interest rates from next week.
The building society will increase its standard variable interest rate by 0.60 per cent, from 2.63 per cent to 3.23 per cent. Fixed rate and tracker mortgage rates will remain unchanged.
The society said the current rate was no longer sustainable, and that an increase was required to help meet the increased cost of funds from the retail, corporate and wholesale markets.
Commenting on yesterday’s announcement, Dara Deering, director of membership business at EBS, said the decision to increase the rates had been delayed for as long as possible in recognition of the financial pressures that many people are currently facing.
“While we were reluctant to make any changes, there is a need to run the society in a manner that is sustainable and in the interest of all members of the society, and therefore an increase in rates became inevitable.”
Bank of Ireland mortgage-holders will see 0.5 per cent added to the standard variable rate, bringing it to 3.1 per cent. Fixed rates will rise between 0.35 per cent and 0.5 per cent, the bank said.
The bank’s new rates will come into effect on April 16th, and will also affect mortgage holders with its subsidiary ICS Building Society.
The bank’s director of consumer lending, Brendan Nevin, said the hike was “regrettable”, but it had no choice.
“The cost of funding mortgages has become increasingly costly, for example, we are paying more to customers for deposits than we are receiving for mortgages,” he said. “As a result of this, our current mortgage pricing is unsustainable.”
The moves by Bank of Ireland and EBS come days after AIB said it would raise mortgage interest rates, blaming the cost of borrowing for the move. It raised its standard variable rate by 0.5 percentage points to 2.75 per cent, and increased fixed rates by 0.24 to 0.46 points.
Permanent TSB was the first bank to begin increasing its mortgage interest rates, with a 0.5 point increase in its standard variable rate in February, and a half-point hike last summer.
It is expected that further increases in the mortgage rates will be introduced as banks try to recover their margins.
