Finance Ireland the third lender to raise mortgage rates

NON-banking lender Finance Ireland has become the third lender to raise its mortgage rates.

The mortgage provider is raising its three-year and five-year fixed rates by 1.2%, a larger-than-expected increase.

It also increases its fixed rates at 10, 15 and 20 and 25 years by 0.5%.

The new rates apply from Monday, June 27.

A Finance Ireland spokesperson said: “Our variable and buy-to-let rates remain unchanged.”

Anyone who has now or receives a loan offer before the rates go into effect Monday of the week will have two months to withdraw loans at existing rates.

The lender added: “All loan offers issued before the close of business on Friday, June 24, will be accepted at current rates provided funds are withdrawn before the close of business on Friday, August 12.

“When a loan offer subsequently expires or any modification to an existing loan offer is requested, the new/revised offer will be issued at our increased rates.”

It comes after ICS Mortgages announced a second increase in its mortgage costs in May.

Your three-year and five-year fixed rates will increase 1pc across all loan-to-value (LTV) bands. It comes just two months after he raised his rates. The latest 1pc increase means the ICS five-year fixed rate will go from 2.6pc to 3.6pc.

This means an extra €131 per month, or €1,572 per year, in payments for a homeowner with a €250,000 25-year mortgage and an 80% loan-to-value ratio.

Avant Money, which shook up the market here when it launched sub-2% mortgages in late 2020, is raising its five-, seven- and 10-year fixed rates for new borrowers by 0.2 to 0.3 percentage points.

Last week, the European Central Bank signaled that it could raise its key interest rate by as much as 0.75 percentage point for September.

Mortgage holders will be hit by the first in a series of interest rate hikes starting next month, a move that will increase annual payments by more than €1,000 for a family with a typical tracker.

Variable rates and future fixed rates will also increase.

The ECB surprised market watchers when it said it could follow July’s 0.25 percentage point increase with a 0.5 percentage point increase in September if high inflation persists in the eurozone.

Most commentators expected a 0.25 percentage point increase this summer, to be followed by another of the same size in the fall.

The ECB has not raised its rates for 11 years.

Some 450,000 mortgage account holders are vulnerable to hikes in the ECB’s main refinancing rate, as they are subject to variable or tracking rates.

Each 0.25% increase in ECB rates will cost €30 more in monthly payments on a €250,000 tracker mortgage.

That comes out to €360 a year. This is based on a trailing 1.25pc spread over the ECB rate, with 20 years left to pay.

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