PERMANENT TSB (PTSB) is to increase its standard variable rate mortgage by a quarter of a percentage point from the middle of next month while its tracker rates will go up by the same amount from the end of next week.
The increase in its tracker rates kicks in on April 18th and was inevitable after the European Central Bank (ECB) announced a rate increase of the same percentage on Thursday.
For every €100,000 owed on a 30-year tracker mortgage of 1.5 per cent plus the ECB rate, a quarter point increase will add about €13 on to a mortgage holder’s monthly repayments.
As a result of the PTSB move, a person with a €300,000 tracker will see their monthly repayments rise by about €480 annually, while someone with a €400,000 mortgage will have to pay an extra €52.50 monthly, or €630 a year.
Bank of Ireland and ICS Building Society were first to move following the ECB increase on Thursday, and within hours of the announcement both lenders confirmed that their tracker rates were going up by the same amount from next Wednesday, April 13th.
While the tracker increases were unavoidable, the hike in PTSB’s variable rate, which goes from 5.19 per cent to 5.44 per cent, will come as a blow to more than 80,000 of its customers on such mortgages.
The increase takes effect on May 16th and comes just two months after the lender increased its variable rates by 1 per cent.
In May 2009 Permanent TSB, which is the largest home loan lender in the State, had a variable rate of just 2.69 per cent. It increased its rate by half a point in July of that year and has had four further increases since then.
While the typical mortgage is in the region of €300,000, a Permanent TSB spokesman said yesterday evening that its variable rate mortgage holders typically owed a lot less than that, having bought their properties before the property bubble began to inflate in earnest. He said that the average mortgage outstanding for customers with standard variable rate residential mortgages was €66,137.
Permanent TSB also effectively exited the fixed rate market at the beginning of this year. In February, it introduced immediate increases of between 2 and 3 per cent on its fixed interest rates for existing mortgage holders rolling off fixed or discounted rates, a move brokers called “shocking”.
PTSB increased its two-year fixed term rate from 5.25 per cent to 7.25 per cent, while the five-year fixed rate will go from 5.75 per cent to 8.75 per cent. A 10-year fixed rate will rise from 6.1 per cent to 9.1 per cent. At the time it promised to introduce a new suite of fixed rate offerings within weeks but had yet to do so.
While the lender has led the way on interest rate increases, it has not moved alone. Last week Irish Nationwide Building Society said it would increase its rate by 0.65 per cent from May 1st. EBS announced a 0.6 per cent variable rate hike last month which saw its variable rate go from 3.83 per cent to 4.43 per cent and Ulster Bank increased its variable rate from 3.85 per cent to 4.35 per cent.
