Finance Ireland to increase variable mortgage rates again

Finance Ireland has become the latest home loan provider to increase its mortgage rates in response to European Central Bank (ECB) rate hikes.

The nonbank lender said that “in light of continuing ECB rate rises” it would increase variable rate products by 1 per cent from Martch 16th.

The company, which has a 5 per cent share of the mortgage market here, has previously raised its fixed and variable mortgage rates in response to rising borrowing costs generally.

In October it raised variable and fixed rates on mortgage products by between 1.5 per cent and 2 per cent.

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Later that month it also said it was “temporarily suspending” offering fixed-rate mortgages of 10 years or longer amid heightened volatility on debt markets.

In 2021, it introduced 15- and 20-year mortgages in a bid to seize market share as Ulster Bank and KBC Bank Ireland announced their retreat from the Irish market.

Non-bank lenders are much more exposed to market rates than mainstream Irish banks as they rely on wholesale markets for finance.

Finance Ireland relies on its 41 per cent shareholder, UK investment house M&G, for initial funding to write mortgages. It then typically refinances pools of mortgages in international bond markets, where the cost of funding has jumped in recent months.

In a brief statement, the lender said it had a range of mortgage offerings and that customers were “advised to contact the lender or a broker or to view the CCPC (Competition and Consumer Protection Commission) website if they think they may qualify for a different product or a different rate on their mortgage”.

The ECB has raised its main lending rate from zero to 3 per cent since July and its president, Christine Lagarde, warned this month that another half-point move is planned next month. She signalled that the ECB will move further in the following months, with euro zone inflation currently running at more than four times the organisation’s 2 per cent target.

In response to the most recent ECB hike, AIB raised the rates it applies to all fixed and variable mortgage products by an average of 0.5 per cent while Bank of Ireland and Permanent TSB said they were keeping their rates under review.