Interest rate hikes for AIB, EBS & Haven customers

Knuttell

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The move comes a week away from an expected cut in the European Central Bank rate.

The hike of up to 0.4pc in the State-owned bank’s variable rate will mean a customer with a €300,000 mortgage will be facing an extra €66 in payments from June 1.
http://www.independent.ie/business/...for-aib-ebs-and-haven-customers-29219870.html

Getting their punches in ahead of an expected ECB rate cut in May,I would expect the others wont turn down this opportunity either.

Full statement

AIB Mortgage Statement

AIB has today (Wednesday, April 24th) announced an increase in its variable mortgage rates by up to 0.40%, effective from June 5th, 2013 while EBS and Haven variable mortgage rates will increase by up to 0.25%, effective from June 1st, 2013.

While AIB and EBS keep their lending rates under constant review, based on current funding costs the Bank does not anticipate any further variable mortgage price increases in 2013.

The decision to raise variable rates is driven by the need to ensure the Bank is lending at long term sustainable pricing levels. AIB’s variable rates have been at unsustainable levels relative to the cost of funding for several years, while EBS has not announced an increase in almost two years. The Group’s cost of funding is driven by a number of factors including wholesale funding costs and deposit pricing. In the current Irish market environment, deposit pricing is largely decoupled from the ECB base rate. AIB has been working to address the issue of mortgage pricing over a period of time and today's announcement delivers a more sustainable platform for operating performance.

Following this increase, AIB, EBS and Haven rates will be in line with pricing in the Irish market and will continue to offer customers competitive rates for new mortgage business.

The average variable rate mortgage for AIB is c. €130,000 and, following this increase, the average monthly payment will rise by c. €24. EBS’s average variable rate mortgage stands at c. €100,000 and this increase represents on average a c. €17 increase in monthly repayments. This increase does not apply to tracker and fixed rate mortgages, which form the majority of the Bank’s Irish mortgage loan book.

AIB’s Director of Products, Fergus Murphy, said: “AIB is making significant progress in returning to a stable banking model and must apply competitive pricing policies in order to make a return to profitability. Prior to this increase, AIB had the lowest standard variable rate in the market, but now regrettably must move more in line with market competitors. While AIB and EBS recognise that any increases are unwelcome for customers, we must ensure that mortgages are provided at a sustainable pricing level.”
 
It's a nightmare. No end to the increases in sight. Will it be long before the rates are up to 6%???!
 
I thought this would arrive sooner - quite why they seem to try and sync it with a downward cut in the ECB rate baffles me. Is there some logic to it?!

Not long before we hit 5% for sure, whatever about 6%.
 
It's a nightmare. No end to the increases in sight. Will it be long before the rates are up to 6%???!

Its similar to the drowning man analogy,they are going pull everyone down with them in order to return to profitability and or subsidise the loss making tracker book.

They really do not care,the tax payer will pick up the debris after them.

Good on anyone who has one but real pain for those on a variable.
 
Here is the AIB statement: [broken link removed]

Existing Residential Owner Occupier Standard Variable Rate will increase by 0.40 % from 4.00% to 4.40%

Loan to Value Variable Rates for Owner Occupiers will increase by 0.25%

Buy-to-Let Standard Variable Rate will increase by 0.40% from 4.95% to 5.35%
Tracker Mortgage Rates remain unchanged.

That is a very big jump for existing customers on the SVR.

AIB are no longer the cheapest lender.
 
This does bring the rates for new customers and existing customers closer, in in cases < 80%, lower.
Currently < 80% is 4.11%apr. Increase puts it to 4.36% vs 4.4% for existing.
 
Getting their punches in ahead of an expected ECB rate cut in May,

And don't forget the carbon tax increase on May 1st, and property tax has to be paid starting in July. I don't think there is a bigger irony than bailed out bankers contributing further to driving this country into the ground by raising rates, when we need every stimulus we can get.
 
I feel so angry about this. Went to AIB in 2006 & asked for a tracker mortgage. Some hair-gelled liar told me they weren't doing them anymore. Turned out they did them until 2008.

So, we went for a standard variable and have been paying for it ever since.

We're cast iron both in terms of rating and income, but I am so tempted to default and say sue me.

Sick of AIB and even sicker of Fine Gael. I will never vote for them again. The combination of the banks and the property tax will be their ticket to the opposition benches.

D.
 
I feel so angry about this. Went to AIB in 2006 & asked for a tracker mortgage. Some hair-gelled liar told me they weren't doing them anymore. Turned out they did them until 2008.

So, we went for a standard variable and have been paying for it ever since.

We're cast iron both in terms of rating and income, but I am so tempted to default and say sue me.

Sick of AIB and even sicker of Fine Gael. I will never vote for them again. The combination of the banks and the property tax will be their ticket to the opposition benches.

D.


I find your attitude quite selfish and typical of the sort of mé Fein attitude that has our republic in the mess we are in. You signed up for a variable mortgage without carrying out complete due diligence. A mortgage undertaking for most people is the single largest financial transaction of a lifetime and should be taken following appropriate thought and research.

Have you always voted Fine Gael? Have you always voted for right of centre parties? Fine Gael and Labour have only been in office for just over two year. Is it too soon to judge their legacy? I think so. Who do you plan on passing your vote to ?
 
I'm guessing you don't have an SV mortgage.

D.

I do. It's with BOI and has increased twice since I moved off the FTB teaser rate. I expect it to increase again as BOI are in a similar position to AIB with regard to profitability. I obviously don't like the fact that it is costing me more but it was always on the cards. Longer term I expect to be paying 5 to 6 per cent interest on the variable. My medium term plan is to over pay and reduce the overall burden.
 
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Hi pugwall you seem to relish the fact that interest rates are increasing and like the doomsday peppers you have prepared yourself for it by overpaying .
Not everyone is in that position and another rate hike will push them to the limit .
You cannot blame svr holders for venting especially when there a decease to the ECB rate due soon
 
Let's assume there was a person on the "average mortgage" who could not afford the extra €24 per month and continues to pay only the existing repayments. In such a case, what would AIB realistically do?
 
We drew down our mortgage with AIB 10 months ago and over that time they will have increased their variable rate by 1.25%. All that after the ECB reduced their rate over the same period. It's a disgrace that VR customers are picking up the can for the mistakes of others
 
Let's assume there was a person on the "average mortgage" who could not afford the extra €24 per month and continues to pay only the existing repayments. In such a case, what would AIB realistically do?

Not a lot.

They would be obliged to write to you under the MARP at some stage.

After a year, you would be €300 or so in arrears. AIB wouldn't be too upset. However, your credit rating would be shot and you would end up paying more interest.

So your best bet is to call them and ask them to extend the term, so that you don't go into arrears.
 
Middle Class Social Welfare

It's high time there were widespread redundancies and salary cuts at the bailed out banks in order to lower costs.

They are obviously not doing a fraction of the business they did during the boom yet they still maintain huge numbers of staff on high wages at the tax payers (and mortgage payers) expense.

The EBS branch network should be closed immediately as it serves no purpose now that EBS is part of AIB.
 
Is there no limit to how high can the variable rate go? Wouldn't it be suicidal to sign up for mortgages with variable rates then?
 
We drew down our mortgage with AIB 10 months ago and over that time they will have increased their variable rate by 1.25%. All that after the ECB reduced their rate over the same period. It's a disgrace that VR customers are picking up the can for the mistakes of others

But you knew all this before you took the loan? Were you not stress tested on the interest rate by at least 2% meaning you can afford this increase?

____________

As an aside, by what percentage have banks stress tested customers in the last year. If it's only 2% and these banks know there is a slight chance of an ECB rate rises then 2% is fine, but they also know that they themselves fully intend to hike rates regardless then their stress testing should be a lot higher than 2%.
 
It's high time there were widespread redundancies and salary cuts at the bailed out banks in order to lower costs.

They are obviously not doing a fraction of the business they did during the boom yet they still maintain huge numbers of staff on high wages at the tax payers (and mortgage payers) expense.

The EBS branch network should be closed immediately as it serves no purpose now that EBS is part of AIB.

The option of reducing operational costs should really be exhausted in a timely manner at this stage. It seems that AIB are picking the path of least resistance, ie the SVR holders. I wonder what the government or regulator should do? In the UK the regulators might be able to push back on the banks on the basis of not ' treating customers fairly'.
 
Is there no limit to how high can the variable rate go? Wouldn't it be suicidal to sign up for mortgages with variable rates then?

Yes, it would. In any other context someone signing up to a lengthy contract with an institution that can unilaterally hike the cost to the other party would be viewed as a fool. Here, it is the only option and people seem nonplussed about signing up for this. Also, it is yet another obstacle facing Irish borrowers that Mr Elderfield was not the slightest bit interested in.

For many this rate rise will have a greater impact than the removal of the PRSI allowance, or even the introduction of the property tax.
 
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