BoI mortgage holders hit by 0.5% rise

Thousands of homeowners and buy-to let customers with Bank of Ireland mortgages will see the cost of their repayments rise by 0.5% from October 24.

The bank confirmed in a letter to mortgage-holders that owner-occupier rates would increase from 4% to 4.5% and buy-to-let rates would jump from 5.15% to 5.65%.

Last week, Bank of Ireland changed the parameters for qualifying for free current accounts.

Yesterday, mortgage holders received letters from the bank informing them of the changes that will see mortgage holders pay an extra €27 a month for every €100,000 borrowed over 25 years. A spokesperson for the bank, which received a €5.2bn, taxpayer-funded bailout, said the decision to hike interest rates was in the interest of taxpayers.

“This decision was regrettable, but necessary, due to the continuing high cost of funding and deposits, and the need to return the bank to profitability. Restoring profitability is in the long-term interests of the taxpayers’ investments in Bank of Ireland and of the economy as a whole,” said the spokesperson.

The bank’s decision to effectively remove free banking from the majority of its customers was criticised by the National Consumer Association (NCA). The NCA urged customers to closely look at the charges, of up 28c a transaction, that they will incur as a result of the bank bringing in a minimum account balance of €3,000 to qualify for free banking.

The NCA urged BoI customers to think about how they use their account and consider switching, if they can make savings.

The NCA’s director of public awareness and financial education, Karen O’Leary, said the bank had reintroduced fees by the backdoor, as they were well aware many customers could not maintain a minimum balance of €3,000.

“We would like to see banks charging consumers based on how they use their account, rather than their ability to maintain €3,000 in their current account. There are very few consumers who can afford to put €3,000 out of reach nowadays.”

Ms O’Leary said the move was a backward step as it would encourage people to “use more cash and less electronic payment methods like debit cards”.