PERMANENT TSB has become the latest mortgage lender to raise interest rates, with the announcement yesterday that it is to increase its standard variable rate by 0.5 per cent to 4.19 per cent.
Approximately 80,000 customers – 38 per cent of the lenders’ residential mortgage holders – will be affected by the rate hike which will take effect on Tuesday, August 3rd.
According to Permanent TSB, the average mortgage outstanding for standard variable rate mortgage-holders is €66,532, which means the impact of the interest rate increase on the average mortgage-holder will be approximately €17 a month.
However, Frank Conway of the Irish Mortgage Corporation said that for someone with a €300,000 mortgage, the rate hike will mean an increase of €87.81 per month, or €1,053.72 per annum.
“Since a year ago, the lender will have pushed up monthly mortgage repayments from €1,264.81 to €1,520.06, an increase of €255.25 per month, or €3,063 per year, on a €300,000 mortgage.”
The lender cited the continuing high cost of funds as the reason for the interest rate hike.
The announcement comes a week after the EBS raised interest rates by 0.6 per cent, and amid growing speculation that other lenders are to announce similar rate hikes in the coming weeks.
A spokesman for AIB said yesterday evening that there were no current plans to raise interest rates, while a Bank of Ireland spokeswoman said that rates were “constantly under review” at the bank.
AIB and Bank of Ireland have both implemented one interest rate hike so far this year.
In April, Bank of Ireland announced a 0.5 per cent increase in its standard variable rate, bringing it to 3.1 per cent, with fixed rates rising by between 0.35 per cent and 0.5 per cent. AIB also increased its rate by 0.5 per cent in April, bringing its standard variable rate to 2.75 per cent, and increasing its fixed rates by 0.24 to 0.46 points.
EBS has increased its interest rate twice this year. Its standard variable mortgage rate will stand at 3.83 per cent from August 1st, when the latest rate increase comes into effect.
Yesterday’s announcement by Permanent TSB is the third half-a-percentage increase by the lender in 12 months. Permanent TSB was the first to raise standard variable interest rates last July, and it increased them again by 0.5 per cent in February.
The hike in interest rates takes place at a time when the European Central Bank (ECB) rate remains at a historic low of 1 per cent.
Earlier this month, the ECB held its main interest rate at 1 per cent for the 14th month running.
Fine Gael’s spokesman on finance, Michael Noonan, yesterday called on AIB and Bank of Ireland to cancel any planned rate increases.
Pointing out that the successful outcome of the European stress tests for the two Irish banks was dependent on taxpayers’ help, Mr Noonan said banks should stop penalising mortgage-holders.
“Having passed the stress test, Bank of Ireland and AIB can probably look forward to having access to funding at cheaper rates.
“But the banks can never be allowed to forget that they only reached this stage because taxpayers have put their collective necks on the line.”
