Permanent TSB raised its standard variable mortgage by 0.5% from February 1. We believe other banks will follow and push up rates in the weeks ahead.
Rates are affected primarily by a bank’s funding costs, which are now significantly higher than they have been in previous years. Customers need to be aware of how their mortgage rate may move even if the ECB keeps the current record low rate of 1% in place until later this year.
Permanent TSB raised its standard variable mortgage by 0.5% from February 1. We believe other banks will follow and push up rates in the weeks ahead.
Rates are affected primarily by a bank’s funding costs, which are now significantly higher than they have been in previous years. Customers need to be aware of how their mortgage rate may move even if the ECB keeps the current record low rate of 1% in place until later this year.
In 2009 Permanent TSB also increased its standard variable rate by half a percentage point. At the time, however, the other Irish banks were in a tricky situation, given their reliance on the Government to get the National Asset Management Agency (NAMA) up and running. Therefore no other Irish bank followed Permanent TSB’s move in 2009.
However things are now very different with NAMA almost operational and banks anxious to improve their margins. A monthly repayment of €1,000 will increase approximately as follows.
• €30 if rates increase by 0.25%
• €60 if rates increase by 0.50%
• €100 if rates increase by 1%
If you plan to avoid likely rate increases by moving to a fixed rate, prompt action and research is advised. The fixed rates on offer in the market vary considerably from bank to bank. Moving to a cheaper lender has become more complex with banks tightening up their lending practices all round and some not even in the market for remortgaging.
If you are able to switch, you may want to make your move sooner rather than later, as banks are likely to increase the fixed rates they offer at the same time as they raise variable rates.
General Queries – info@ifgcork.ie
Our website – www.ifgcork.ie
Cork Office – 021 427 1687
Financial Advisors
Fergus O’Halloran – fergus.ohalloran@ifgcork.ie – 087 2244444
David Murphy – david.murphy@ifgcork.ie – 086 8395529
Bill Anderson – bill.anderson@ifgcork.ie – 086 1728377
