Homeowner headache: ECB refuses to rule out interest hike as EBS raises rate
EBS, which has been nationalised and merged into AIB, is to increase its standard variable rate by 0.25%. The new rate of 4.93% — or 5.1% APR — is effective from October 1.
The lender said its average standard variable rate loan is €90,120, which will mean average monthly payment increases of about €12. EBS has 48,000 customers on standard variable rate mortgages.
Dara Deering, director of EBS retail business, blamed the rising cost of funds to the business for the latest hikes.
Last week, Bank of Ireland announced it was to increase its standard variable mortgage rate by 0.5% next month.
Both Ulster Bank and Permanent TSB put up their variable rates in February.
Hikes in interest rates at European level bring more hardship for Irish consumers and homeowners. There had been hope that, with major economies heading for recession and a vow by the US Federal Reserve to keep its rates near zero for two years, the European Central Bank might be pressured into, at the very least, holding off any further interest rate hikes this year.
Already in 2011 it has raised rates twice.
The ECB raised its main interest rate in April and July — by 25 basis points each time — and it now stands at 1.5%.
According to ECB executive board member Juergen Stark, it will not be easing off any time soon.
“The ECB is the only major central bank that has increased interest rates since the start of the year,” he told Germany’s Handelsblatt business daily. “Keeping interest rates too low for too long carries risks.”
He said the ECB had never cut its main refinancing rate to an extremely low level.
Meanwhile, European and world shares were again weaker yesterday as recession and European bank funding continued to concern investors.
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