Bank of Ireland hikes mortgage rates
The Bank of Ireland has become the latest lender to increase its mortgage rates, affecting 100,000 UK customers.
The bank will raise the standard variable rate (SVR) on its mortgages to 4.49% from 2.99% in two stages.
The rate will rise to 3.99% from June before going up to 4.49% from September, due to the increased cost of funding mortgages, the bank said.
The full increase will lead to an £81 rise in the monthly cost of a £100,000 repayment mortgage on a Standard Variable Rate.
The announcement marks the first increase since August 2007 and Bank of Ireland said the new rate will remain “competitive” when compared with its UK peers, many of whom already have rates above 4.5%.
The bank stressed that the change does not affect Post Office customers.
It said in a statement: “The cost of funding mortgages has increased significantly for UK lenders in recent years, including Bank of Ireland. For this reason, it is necessary for Bank of Ireland to increase its SVR.
The move follows Halifax's announcement on Sunday that it is raising its SVR rate.
Some 850,000 borrowers will see their mortgage costs increase as the rate rises from 3.5% to 3.99% from May 1, Halifax said.
The average balance of the Halifax customers affected is £67,500, meaning payments would increase by nearly £16.40 a month to £498.95 on a capital repayment mortgage with 15 years remaining.
This equates to nearly £200 extra a year.
RBS-Natwest confirmed on Saturday that it is pushing up rates on two of its products — the Offset and The One Account — by 0.25%, taking them to a rate of 4%, affecting around 200,000 customers.
Recent mortgage rate hikes come despite the Bank of England maintaining the base interest rate at a historic 0.5% low and have previously been branded “shocking” by the Consumer Action Group. Analysts have warned that lenders are expected to tighten up on borrowing this year amid weak economic conditions.