The EBS has become the State’s third lender to announce a significant increase to its mortgage rates in little more than a week and will raise its standard variable rate (SVR) mortgage by 0.6 per cent.
From April 1st, the rate will increase from 3.83 per cent to 4.43 per cent, adding over €100 a month to the repayments on a €300,000 mortgage.
For every €100,000 owed, a 0.6 per cent increase adds €34.86 to monthly repayments. On a €300,000 mortgage the increase will mean an additional annual cost of €1,254.96.
Last week Permanent TSB increased interest rates for variable rate mortgage customers by 1 per cent to 5.19 per cent while Ulster Bank announced a rate hike of half a point from 3.85 per cent to 4.35 per cent.
The EBS said its increase was unavoidable. It blamed the increased cost of its own borrowing from retail, corporate and wholesale markets for the raise. It said the average SVR loan size for its customers was €90,108 which would make the average monthly payment increase around €30.
“As the costs of funds to EBS continues to rise in international markets, EBS needs to take this step to ensure that our business remains viable,” spokeswoman Dara Deering said.
“They have stuck to a well-established formula with this [level of] rate increase,” said financial advisor Frank Conway. “I would have been concerned that they might have gone even higher.”
The bank’s market share has grown considerably in recent years as other players, including the Bank of Scotland exited the Irish market. At the end of last year it had around a quarter of the mortgage market.
The news from EBS comes on the back of Permanent TSB’S increases of between 2 and 3 per cent on its fixed interest rates for existing mortgage holders coming off fixed or discounted rates.
The bank increased its two-year fixed term rate from 5.25 per cent to 7.25 per cent while the five-year fixed rate will go from 5.75 per cent to 8.75 per cent. A 10-year fixed rate will increase from 6.1 per cent to 9.1 per cent.
Other banks operating in the mortgage market refuse to be drawn on plans to increase their SVR mortgage rates but it seems likely they will follow the lead of Permanent TSB, Ulster Bank and EBS.
“Without a doubt they are all going to follow suit,” Mr Conway said. “They are all in the same boat when it comes to funding.”
