THE EBS building society has announced its intention to increase its standard variable rate (SVR) mortgage by a quarter of a percentage point from the beginning of August.
The building society’s rate will climb from 4.43 per cent to 4.68 per cent.
While such a move would cost someone with an average mortgage of €300,000 nearly €40 a month, the consequences for most of the society’s mortgage holders are likely to be a lot less severe as most of its customers are on tracker mortgages, and will not be affected by the move.
EBS said the average size of mortgages held by its customers with SVRs was €90,000, so the move will add just €12 per month to the cost of servicing such a loan.
It is the second time this year the EBS has increased its mortgage rate, which went up by 0.6 per cent in February. It said it had no option but to increase the cost of borrowing to some of its mortgage holders, as the costs of acquiring funds remained high.
The move is not entirely unexpected, as the European Central Bank has repeatedly signalled the euro zone is entering what will be a sustained cycle of interest rate hikes, and Irish financial institutions are continuing to lose money on tracker mortgages issued at the height of the boom.
In April, the ECB raised its key lending rate by a quarter of a percentage point to 1.25 per cent. It was its first increase in more than two years. At least one further rate increase is likely before the end of the year.
