Permanent TSB has confirmed it is to increase interest rates for customers with standard variable rate mortgages by 1 per cent but denied claims it is to exit the fixed rate mortgage market entirely.
Ulster Bank has become the second bank in 24 hours to increase its interest rates for customers with Standard Variable Rate (SVR) mortgages.
Ulster Bank plans to increase its mortgage rates for SVR customers by half a point from 3.85 per cent to 4.35 per cent, from March 1st. The move will add over €90 on to the monthly repayments for a person with a mortgage of €300,000.
The decision comes on the back of a 1 per cent interest rate increase from Permanent TSB, the State's largest home loan lender. In said its new standard variable rate of 5.19 per cent will come into force on March 7th.
The increase, which will hit approximately 80,000 homeowners, will see a person with an average home loan worse off to the tune of more than €2,000 a year . It is the bank's fourth rate increase since August 2009. It is also the bank's largest rate increase in a single step and means the bank has increased its standard variable rate by 2.5 per cent in less than two years.
For every €100,000 owed, a 1 per cent increase adds €61.60 to monthly repayments so on a €300,000 mortgage, the increase will mean an additional €184.80 per month, or €2,217.60 annually.
Permanent TSB said it had suspended its fixed rate products for new customers ahead of a re-pricing which is likely to happen in the next two weeks but flatly denied media reports that it was planning to exit the fixed rate market entirely.
People who are on fixed rates with the bank at present will be unaffected by the rate increases or the fixed rate suspension but those on variable rate mortgages will not have the option of switching to a fixed rate in the coming days to avoid the punitive affects of the rates hike.
Independent mortgage and insurance brokers group PIBA said it was a "black Friday" for mortgage holders.
"This is the beginning of a new period of more expensive mortgages," said Rachel Doyle, director of PIBA mortgage services.
"This is a very difficult situation for mortgage holders already trying to cope on reduced incomes and increased exchequer liabilities."
Last month the other major retail banks offering fixed rate mortgages denied they had any plans to abolish their fixed rates.
Allied Irish Banks, Bank of Ireland and KBC Homeloans all said while their products were reviewed on an ongoing basis, they had no plans to drop fixed rate mortgages in the months ahead. They are, however, likely to follow Permanent TSB's lead in repricing them to take into account increases in their own standard variable rate.
