Lenihan stance gives green light to rate hikes

BANKS have effectively been given the green light to increase mortgage interest rates after Finance Minister Brian Lenihan said he will not intervene in the commercial decisions of financial institutions rescued by the State.

From Monday, the country’s largest mortgage lender, Permanent TSB, will increase its standard variable rate for customers by 0.5%, leading to concerns that other mortgage lenders will follow suit.

The bank could not rule out further increases. Its chief executive, David Guinane, said: “We didn’t take this step lightly; we took it after a long deliberation and we would be very reluctant to take that again. But with regards to a 100% guarantee, I’m afraid I can’t give that.”