80,000 householders face mortgage payment hike

ABOUT 80,000 householders are to be hit with higher home repayments, it has emerged.

Permanent TSB, one of the country’s biggest mortgage lenders and one of the six banks guaranteed by the state, said its standard variable customers would be hit with a 0.5% hike from August 3.

The increase will add around €60 a month to a mortgage of €250,000, and it is the third time it has hiked its rates in a year and follows an EBS rate hike last week.

For someone with a mortgage of €300,000, the increase pushes up their monthly repayment by €87.81 per month or €1,053.72 a year.

In a statement, chief executive David Guinane said the bank regretted having to take the decision but it reflected the high costs of funds for the banks. The rate jumps from 3.69% to 4.19%.

The changes will affect around 38% of the bank’s residential mortgage customers.

Those on fixed or tracker mortgages will not be hit.

Permanent TSB said 60% of the bank’s standard variable customers owe less than €60,000, with the average mortgage working out at €66,352, equating to an extra €17 a month.

The lender was the first to raise standard variable interest rates last summer and increased them again by 0.5% in February.

Permanent TSB and AIB were the first to move on interest rate hikes earlier this year with Bank of Ireland and EBS following their lead shortly afterwards.

Such moves will only affect those on SVR loans, while mortgage holders on tracker products should not expect any rate increase until late next year as their rates track the European Central Bank (ECB).

The ECB has signalled it will not be increasing rates any time soon, with some analysts believing a rate hike may not come until early 2012.

Meanwhile, welcoming news that the banks had successfully passed stress tests, Fine Gael finance spokesman Michael Noonan warned this had only been achieved at enormous risk to taxpayers.

Mr Noonan said the banks must now stop penalising mortgage holders.

“We have seen variable mortgage rates creeping up over the last few months, even though the European Central Bank has kept its own rate untouched,” he said.

“The least taxpayers should now expect is for Bank of Ireland and AIB to set an example by cancelling planned increases in variable mortgage rates. It’s the least taxpayers deserve.”