herald

Wednesday 19 December 2018

Families hit by crushing new mortgage hike

HOMEOWNERS are facing yet more pain as lenders start to increase mortgage rates by 1pc.

Permanent TSB is believed to be pushing up its variable rate by a full 1pc, dashing hopes that it would rise by just 0.5pc.

It is understood the bank decided to impose all of 2011's increases in one go, which will bring the standard variable rates from 4.19pc to 5.19pc.





Borrowed

This jump would add a further €60 to the monthly repayments for every €100,000 borrowed. Some 200,000 mortgage holders have standard variable rates.

The European Central Bank (ECB) kept its rate at 1pc but this latest rise would amount to 2.5pc in cumulative increases imposed by Permanent TSB.

And experts believe that any increase brought in by one lender would be followed by others in the market.

But the ECB is also expected to hike its main rate to counter inflation in the eurozone.

An ECB rise would affect 400,000 homeowners who have tracker rates -- but that it would also be added on to the variable rate.

The Permanent TSB rise has not yet been confirmed, but representatives said: "We are monitoring the situation."

However, it's expected the official statement will be announced very soon.

Recent research showed that three-quarters of mortgage holders would be unable to cope with mortgage rises of €200 or more a month.

Financial adviser Karl Deeter, of Irish Mortgage Brokers, said other lenders would follow Permanent TSB.

He advised affected borrowers to sign up for a two-year fixed deal of 5.19pc.

Separately, it was revealed in figures released from the Central Bank that loans to households fell by 5.2pc and loans to non-financial companies fell 1.2pc in the year to December.





Demand

"There is very little good news in these latest banking figures," said Bloxhams' chief economist Alan McQuaid.

He added: "Until the banking sector crisis is fully resolved and things improve on the labour market front then the supply/demand for credit will remain subdued."

clairemurphy@herald.ie

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