Almost 80,000 mortgage customers are facing higher mortgage repayments after Permanent TSB confirmed it will raise interest rates from February 1st.
The financial institution said today it plans to increase the rate on its standard variable rate (SVR) mortgage and related products by 0.5 per cent, bringing the new rate to 3.69 per cent.
It blamed the continuing high cost of funds required to finance the bank’s mortgage loan book for the move.
"While the bank sources funds from a variety of sources, the overall cost of funds continues to be substantially higher than the official ECB interest rate. For example, Permanent TSB is currently paying up to 3.35 per cent for retail deposit funds. This is higher than the bank’s SVR mortgage of 3.19 per cent," Permanent TSB said in a statement.
Chief executive David Guinane said the decision had been forced on the bank
"We will of course work closely and sympathetically with any customer who has financial difficulties but we must face up to our own financial challenges also," he said. "To persist with uneconomic margins on this product at a time when the bank is losing money would be irresponsible and would result in larger problems down the line."
The bank said affected customers with SVR mortgages will have an average of €15 per month added to their repayments, based on its calculations that customers have an average mortgage outstanding of €62,500.
The move has prompted fears that other banks will follow Permanent TSB's lead, with opposition politicians calling on the Government to take action.
