FINANCES Ireland has become the latest lender to hike mortgage rates in response to two hikes by the European Central Bank.
Non-bank floating and new fixed interest rates rise from Friday.
It increases variable and fixed interest rates on its mortgage products by 1.5 percentage points to 2 percentage points.
Those are big increases, mortgage experts said. This means that some plans will be €300 more per month.
The amount of the increases depends on the mortgage lending value and/or the term of the fixed interest payment.
The new tariffs apply to new business with immediate effect.
Approved mortgage applications drawn before close of business this Friday will continue to have existing interest rates.
This means that the lender gives little notice of rate hikes to switchers and new buyers who are in the process of getting a new mortgage.
After the rate hike, the price of a 20-year fixed-rate mortgage is between 4.6 and 5 percent, depending on the percentage loan-to-value ratio.
According to mortgage broker Michael Dowling, a first-time buyer with a 90 percent loan remaining to be drawn will see the five-year fixed rate rise from 3.95 percent to 5.95 percent from Friday.
This adds about €300 to the monthly payment.
Over a year, this adds up to an additional €3,600 in repayments.
Some buy-to-let lender rates will rise to 6.8 percent, rates not seen in this market in a long time.
Mr Dowling said: “These are wild hikes and they appear to be inconsistent with current interest rates.”
It is the second time this year that Finance Ireland has hiked interest rates.
A spokesman for Finance Ireland commented: “Over 80 per cent of our loan applications over the past year were for fixed maturities of 10 years or more as clients seek safety at a time of widely forecast rate increases.
“Overall, we have funded a strong volume of mortgages this year, but these rate hikes that we are making are a direct result of the significant increases in funding costs over the past few months.”
The move comes after the European Central Bank hiked interest rates twice this summer, raising its benchmark interest rate to 1.25 percent.
And it has threatened further rate hikes.
It emerged last week that ICS Mortgages will raise all new fixed rates by 0.5 percent across all loan-to-value segments starting earlier this month.
The five-year fixed rate for those with a 90 percent loan-to-value ratio is 4.19 percent.
This comes after an earlier announcement that Dilosk-owned ICS will increase its variable rates by 1.25 percentage points from October 1 for retail customers.
In August, ICS Mortgages announced it would limit the size of new home loans to just two-and-a-half times income for the first time.
Pepper, which manages 60,000 mortgages sold by banks to vultures, has raised variable rates by 1.25 percent.
This has increased payments by €140 a month for a borrower the Irish Independent spoke to.
Homeowners whose mortgages are managed by Pepper and other loan servicers cannot set their interest rates, while many cannot switch to other lenders for a variety of reasons.
Trapped homeowners now fear an expected wave of rate hikes in Europe.
https://www.independent.ie/business/personal-finance/property-mortgages/mortgage-lender-hikes-variable-and-fixed-rates-by-up-to-2-percentage-points-42035267.html Mortgage bank increases variable and fixed interest rates by up to 2 percentage points