Source: Bank of England

Bank of Ireland on Thursday announced interest rate increases across its Fixed and Tracker Rate mortgages and on Homeloan and Residential Investment Loans. Also on Thursday, the 3-month Euribor inter-bank rate for the Eurozone, rose to a new 2008 high.

Bank of Ireland said that there are changes of between 0.10% and 0.35% across a range of Fixed and Tracker Homeloan rates for new business. In addition there is an increase of 0.55% on the 1 year fixed rate for homeloans. There are increases of up to 0.40% on Residential Investment Loans.

Also on Thursday, the 3-month Euribor inter-bank rate - a key benchmark rate in the Eurozone for banks and commercial borrowers - hit a new 2008 high of 4.857% compared with the ECB's benchmark rate of 4%.

Before the onset of the credit crisis last year, the normal margin over the benchmark rate was 0.150%. The return to elevated Euribor levels in the past two months, after a decline in January, is equivalent to typically 3 European Central Bank rate hikes.

Euribor Rates

Several Irish home loan lenders have raised rates in response to the high Euribor level. Lending has also been tightened including an end to 100% mortgages, which in 2007 accounted for 36% of mortgages transacted by first time home buyers.

Bank of Ireland subsidiary, ICS Building Society, which sells most of its mortgages through intermediaries, has told brokers it was reintroducing its one-year discount on standard variable rate mortgages, offering customers a reduction of 0.5% for the first year.

Commenting on the rate increases Brendan Nevin, Director, Personal Lending, Bank of Ireland said:

'The cost at which banks borrow has continued to increase over the last number of months.

We have been monitoring this situation very closely, and today we are moving our rates to reflect the current market conditions'.

These rate changes are effective from Friday 2nd May 2008.

BoI Rate Table