AIB HAS become the fifth mortgage lender in the State to announce a substantial increase in mortgage rates since the beginning of the year with some of its fixed-rate offerings increasing by almost 1 percentage point with immediate effect.
The bank said it had held off on announcing the increases for as long as possible and blamed yesterday’s move on the high cost of mortgage financing. AIB’s one-year fixed-rate mortgages for owner-occupiers has gone up from 3.59 per cent to 4.15 per cent, while a similar mortgage for buy- to-let investors has increased to 5.15 per cent from 4.59 per cent.
Owner-occupiers who sign for a three-year fixed-rate mortgage will pay 4.88 per cent instead of 3.89 per cent, while investors will be charged 5.88 per cent, an increase of the same percentage.
Five-year fixed mortgage rates will cost owner-occupiers 5.35 per cent, compared with 4.39 per cent, while investors who take out a fixed-rate mortgage over the same period will now pay 6.35 per cent, up from 5.39 per cent.
For every €100,000 owed, a 1 percentage point increase adds about €61 to monthly repayments. Someone with a €250,000 mortgage, over 30 years, with a fixed rate of 3.5 per cent, is paying €1,122 a month. If the interest rate goes up by 1 percentage point, the new monthly repayment will be €1,266.
Four other mortgage lenders have also announced rate increases.Permanent TSB announced a 1 point increase to its standard variable rate at the beginning of last month and temporarily suspended its fixed rates for new customers. Its two-year fixed-term rate for existing customers went from 5.25 per cent to 7.25 per cent, while the five-year fixed rate leapt from 5.75 per cent to 8.75 per cent. Its 10-year rate went from 6.1 per cent to 9.1 per cent, effectively pricing itself out of the market.
EBS left the fixed-rate market and announced a 0.6 per cent SVR hike, from 3.83 per cent to 4.43 per cent. Ulster Bank increased its SVR from 3.85 per cent to 4.35 per cent, from March 1st.
KBC Homeloans increased its two-year fixed-term rate from 3.7 per cent to 4 per cent. The bank’s three-year fixed rate climbed to 4.45 per cent from 3.9 per cent and its five-year fixed-rate mortgage increased by 0.7 per cent, from 4.5 per cent to 5.2 per cent.
People with tracker mortgages have so far been immune to the increases, but European Central Bank (ECB) head Jean-Claude Trichet has signalled ECB rate rises are on the cards, perhaps starting as early as next month.
As mortgage rates have risen, so too have the number in arrears. This has climbed to nearly 6 per cent of the market, while the rate of repossessions has also accelerated, Central Bank data indicate.
The latest figures show a dramatic worsening over the last 12 months. Account-holders behind on payments by more than 90 days now owe €8.6 billion. Some €6.2 billion of that is owed on accounts more than 180 days in arrears.
