Fresh misery is likely to be heaped upon the shoulder's of the States mortgage holders in the coming weeks as the main lenders unveil a raft of rate increases which could see a person with an average home loan worse off to the tune of more that €2,000 a year.
While none of the main lenders would be drawn on the timing and scale of the mortgage increase today, informed sources confirmed that Permanent TSB, the largest player in the home mortgage market, will be first out of the block.
While a Permenant TSB spokesman insisted that no decision had been made on the timing or the scale of any mortgage rate increases, informed sources confirmed that one is likely within days and it could be as high as 1 per cent.
When the move is confirmed, it will be the bank’s fourth rate increase since August 2009 and if it is, as widely expected, 1 per cent it will make it the largest rate increase in a single step. It will mean the bank has increased its standard variable rate by 2.5 per cent in less than two years.
"Money is very tight for all the banks and rate increases are inevitable," an industry source said. "If the bank were to increase rates by 1 per cent they would certainly get some flack but at least they would get the year's increases out of the way in one go".
For every €100,000 owed a 1 per cent increase will add €61.60 to monthly repayments and on a €300,000 mortgage, the increase will mean an additional €184.80 per month, or €2217.60 annually.
While these figures will make for grim reading for someone with a SVR of that magnitude, the reality is the increases will be less significant for most people as those with higher mortgages taken out over the last decade tend to be either on tracker on fixed rate mortgages and will not be negatively affected by any increases.
"Permanent TSB has experienced higher levels of mortgage arrears when compared to the national average," financial advisor Frank Conway said." It has also been the most aggressive at increasing interest rates for its standard variable rate customers," he added and warned that and rise is likely to cause "a further spike in arrears for that lender".
Mortgage arrears continue to be a major problem in the Republic and Central Bank statistics suggest that there are over 40,000 mortgage holders who are 90 days or more in arrears on their mortgage repayments.
The European Central Bank is widely expected to increase its base rate of lending by September which will further push up borrowing costs for all standard variable and tracker mortgages later this year.