BoI raises variable mortgage rate

Bank of Ireland has raised interest rates on variable rate mortgage holders by 0.5 per cent. The increase was made without informing the media today.

Spokeswoman Anne Mathews said there was "no reason whatsoever" why the media was not informed about it.

Customers have begun to receive letters through the post today confirming that the rise will come into affect from October 24th.

"This was announced back in August. We don't always issue press releases. For impacted customers, we are going to write to them," she said.

The 0.5 per cent rise pertains to all customers with Bank of Ireland and ICS who have variable rate mortgages.

Ms Mathews referred to a statement issued by the bank in August which said the rate increase was necessary to return the bank to profitability and it was also due to the high cost of funding.

"Restoring profitability is in the long term interests of the taxpayers' investments in Bank of Ireland and of the economy as a whole," the statement said.

In addition Bank of Ireland did not pass on either of the interest rate cuts brought in by the European Central Bank (ECB) this year.

The decision has been condemned by the opposition. Fianna Fáil finance spokesman Michael McGrath said Bank of Ireland regard "variable rate customers as an easy target to make up for losses incurred elsewhere".

He said the effect will be counterproductive with more mortgage holders slipping into arrears.

Sinn Féin TD Peadar Toibín said the move was guaranteed to push some mortgage owners over the edge, potentially taking people who are just meeting their mortgages into the volatile mortgage distress category.

"It puts the demands of international bank bondholders over the needs and rights of ordinary Irish citizens," he said.

He said the inability to make banks understand their debt to the Irish people "is the Government's biggest failure to date."

A spokeswoman for the Department of Finance said it was a "commercial decision" for the bank pointing out that the Irish taxpayer only owns 15 per cent of the bank.

"We don't get involved in day to day banking. The Government would have no role in it," he said.