Mortgage lender ICS is raising its variable rate weeks after severely curtailing its lending.
The non-bank lender is raising its floating rate by 1.25 percentage points for retail customers starting October 1.
This means that the interest rate on a variable-rate owner-occupier mortgage with an LTV of less than 70 percent will increase from 2.45 percent to 3.7 percent.
The variable rent rates increase by 0.5 percentage points.
The move comes weeks after Dilosk-owned ICS Mortgages announced it would limit the size of new home loans to just two-and-a-half times income for the first time.
Commenting on the rise in variable interest rates, Ray McMahon, Chief Commercial Officer said, “Lenders continue to experience significant increases in their funding costs due to continued volatility in international capital markets.
“Like all prudent mortgage lenders, ICS Mortgages must ensure that our mortgage products are stable funded, which reflects the evolving interest rate environment.”
Mr McMahon said ICS Mortgages remains committed to offering competitive mortgage rates.
Earlier this month, ICS said applicants will not consider bonuses and other variable compensation when calculating their earnings.
ICS, which has raised rates twice this year, told brokers earlier this month that couples need a combined income of at least $100,000 to qualify for a mortgage.
It will only lend two and a half times the income of the applicants, compared to the three and a half times imposed by the regulators.
First-time buyers are only eligible for 80 percent of the property’s value. This number drops to 70 pieces for used buyers. There will be no capital release on applications from transfer applicants and applications from self-employed persons will be evaluated on the basis of directors’ salary or drawings only.
Broker Michael Dowling said the restrictions meant very few applicants would meet loan approval criteria.
ICS Mortgages’ move to severely restrict its lending will give AIB, Bank of Ireland and Permanent TSB enormous market power.
They are already benefiting from the planned exits of Ulster Bank and KBC and have boosted their mortgage business by buying mortgage books from the two exiting banks.
ICS’ lending cuts raise major fears about competition in the mortgage market at a time when the European Central Bank has embarked on a tough plan to hike interest rates.
https://www.independent.ie/business/personal-finance/property-mortgages/ics-mortgages-to-increase-variable-rate-by-125pc-41944933.html ICS mortgages increase the variable interest rate by 1.25 percent