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Anger mounts as over 70,000 hit by AIb's decision to hike loan rates

OUTRAGE is mounting over the decision by AIB to raise interest rates by 0.5pc -- affecting tens of thousands of hard- pressed homeowners.

As many as 70,000 homeowners will be affected by the bank's shock decision.

It represents an extra €56 a month for homeowners with a €200,000 mortgage over 25 years.

And the hike represents an additional €90 a month for those with a €300,000 mortgage.

There has been widespread condemnation over the interest rate hike since it was announced yesterday.

Ciaran Phelan, CEO of the Irish Brokers Association, said: "Sadly, it looks like AIB are following the lead of other banks in asking the majority of mortgage-holders that consistently pay their mortgage to contribute toward those that do not."



fears

He added that it was time for the bank to consider "more long-term measures".

AIB, one of the banks bailed out by the taxpayer, is putting up its rates at a time when the ECB is cutting rates.

Its announcement that it was set to increase its standard variable rate for mortgage holders from 3pc to 3.5pc has been greeted with dismay, amid fears that other banks may follow suit.

Fianna Fail finance spokes-person Michael McGrath said that this would prove to be "counterproductive for the bank".

And Frank Conway, of the Irish Financial Review, said that the interest rate rise was "a huge increase".

AIB chief executive David Duffy said that raising the standard variable mortgage interest rate by 0.5pc was a "very difficult" decision to make.

He said that raising the rate was necessary because of the cost of funding.

AIB claimed it has the lowest standard variable rate in the Irish mortgage market.

fdillon@herald.ie