The increase in Finance Ireland’s variable rate will come into effect on September 12th.
This move will raise the lender’s variable rate to a range of 6.5% to 6.95%, depending on the loan to value ratio.
Notably, these rates are some of the highest in the market, excluding those charged by vulture funds.
Finance Ireland stated that there will be no adjustments to their fixed rates, as the majority of their mortgages are already on fixed rates.
In their statement, Finance Ireland advised customers to reach out to the lender or a broker, or to visit the Competition and Consumer Protection Commission website, if they believe they may qualify for a different product or rate for their mortgage.
This increase follows a similar-sized hike in June, subsequent to the ECB’s 0.25% rate increase.
Rival mortgage provider ICS Mortgages also raised their variable rates in June, but they have yet to announce any changes after the ECB’s July meeting.
In June, the average interest rate for new mortgages reached its highest level in years, rising by 0.2% to 4.04%, according to the Central Bank.
This increase was the second-largest jump in the eurozone, bringing the average rate for new loans to 3.79%, which is double the rate from last summer.
On average, outstanding mortgage holders in Ireland could be paying well over 5%, whether on fixed or variable loans.
Despite the significant monthly increase, mortgage rates in Ireland, particularly for new loans, remain relatively competitive compared to the rest of the eurozone, as Irish banks have been slower to pass on the ECB’s rate hikes.
However, rates in Ireland were already considerably higher than the eurozone average before the ECB began raising rates last summer in an effort to control inflation.
According to bonkers.ie, average rates across the eurozone range from 1.93% in Malta to 6.02% in Latvia.
Furthermore, deposit rates for savers in Ireland are among the lowest in the eurozone, with an average overnight deposit rate of 0.07% in June, which is one-third of the eurozone average.
The series of rate hikes has resulted in a record increase in interest income for Ireland’s main banks – AIB, Bank of Ireland, and Permanent TSB – as indicated by their half-yearly results.
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