Experts predict homeowners may be hit by variable rate hike

Holders of variable rate mortgages should brace themselves for an increase in the rate next year, according to the company Irish Mortgage Brokers.

Karl Deeter, operations manager with the Dublin-based company last year predicted the increases, which occurred in the rate this year.

The current rate is between 3.5% and 4%.

Mr Deeter, who is also a member of Smart Taxes, a taxation think-tank, and an external adviser to the Expert Group on Mortgage Arrears set up by the Government, predicts the rate in 2011 will go up to 5%.

The predicted increase would affect 200,000 home owners.

The forecast is related to the 85bn loan being provided to the country by the EU and the International Monetary Fund (IMF).

This money is costing more to borrow than previous money which this country received from the EU.

The banks are expected to pass the cost of paying for it onto homeowners.

Other experts are also warning of an increase, possibly within months.

They agree that the banks, having to pay extra for the money they receive, will pass the charge onto homeowners.

The news comes as the number of people in difficulty with their mortgage continues to rise.

Statistics published recently indicate that some 70,000 homeowners are having a problem meeting repayments.

Many have agreed new payment schedules with their lender.

Allied Irish Banks, Bank of Ireland, EBS, permanent tsb and KBC Homeloans all put up their rates this year.

Meanwhile, the 400,000 customers with tracker mortgages are luckier. The rate they pay is linked to the interest rate set by the European Central Bank (ECB).

When that rate goes up, their payments will increase. But there is no sign that the ECB is planning an increase any time soon.

Article courtesy of The Evening Echo