BOI mortgage hikes to affect almost 58,000 borrowers

Bailed-out Bank of Ireland today announced almost 58,000 homeowners are to be hit with a hike in interest rates for the second time this year.

The lender revealed its standard variable mortgage rate will jump to 3.49% next Tuesday.

The Labour Party claimed the hike was unjustifiable after responsible households effectively bailed-out reckless banks.

Ciaran Lynch TD, spokesperson on housing, said: “We already know that tens of thousands of homeowners are under immense pressure with their mortgages, with many of them falling into arrears, and an increase in interest rates, such as this will only make things worse.”

Bank of Ireland – the second lender to hit householders’ pockets in recent weeks – is one of the six banks guaranteed by the state.

It confirmed 44,262 account holders will be affected by the announcement, but the owner-occupiers affected generally have older, smaller mortgages.

Customers owing an average €81,995 will have seen their repayments rise by €450 this year, from €548.07 a month in January to €585.36 after this latest increase is implemented.

Borrowers already on a fixed rate will not be impacted.

Elsewhere the bank’s building society, ICS, revealed interest rate increases of up to 0.6% to more than 13,600 customers with owner-occupier and buy-to-let mortgages.

Sinn Féin’s finance spokesman Arthur Morgan said the knock-on effect of endless mortgage interest hikes on the public finances, at a time of fragility in the domestic economy, is enormous.

“The bottom line is, to generate economic activity that will result in meaningful job creation and improvements in tax revenues, consumer spending needs to recover and this will not happen when ordinary people are crippled under the weight of mortgage interest payments,” added Mr Morgan.

Brendan Nevin, Bank of Ireland’s director of consumer lending and managing director of ICS, defended the plans and said funding mortgages has become increasingly costly.

He maintained the institution was paying more to customers for deposits than it was receiving for mortgages.

“As a result of this, our current mortgage pricing is unsustainable,” said Mr Nevin.

“While any increase is regrettable, we have no choice but to make this move to ensure we remain open for business and continue to support our customers and the Irish economy going forward.

“At this point, we do not envisage further mortgage rate increases in the current year outside of ECB moves.”