EBS Building Society is the latest mortgage lender to increase its variable mortgage interest rates by 0.6%. This recent increase also applies to anyone who has a mortgage with Haven Mortgages, the Broker arm of EBS.
Is this rate increase justified?
EBS will quote the cost of funding and the fact that they have to become a profitable company again in order to start paying back the money that the government has pumped into the society. On the one hand it does seem logical that they cannot continue to make a loss on mortgages if they are to move forward and become profitable again. However this is very hard for mortgage customers to take as they are the ones who have effectively saved the banks with the tax payers bailouts.
Variable rate mortgage cusotmers are really the only ones that the banks can use to increase their profit margins on morgages. Tracker rates can only be increased when the ECB moves rates but it is unlikely to do so in 2010.
Unfortunately it seems like there are more interest rate increases to come this year and next. There is a good chance that Bank of Ireland, AIB, Ulster Bank and Irish Nationwide will also increase rates before the end of August.
These variable rate increases will not affect those on fixed or tracker rates. Those on fixed rates however will be moving onto higher variable rates once their fixed rates end. Those on trackers will not see any movement until the ECB moves rates.
Anyone on variable rate mortgages really should consider a fixed rate. Fixed rates have increased over the last 12 months and in hindsight last year was the time to fix. However there are still some good fixed rates available.
No comments:
Post a Comment