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Permanent tsb bank on Friday announced that it will raise the interest rate
on its Standard Variable Residential Mortgage [SVR] and other variable rate
mortgages by 0.5% with effect from Tuesday August 3rd . The new SVR rate for
permanent tsb customers following this increase will be 4.19% [was 3.69%].
The Chief Executive of Permanent tsb, David Guinane, said that the bank
regretted having to make this decision but that it reflected continuing high
costs of funds for the bank. The changes will affect approximately 80,000
customers or 38% of the bank’s residential mortgage customers. It will have no
impact on customers with fixed or tracker mortgage products. The average
mortgage outstanding for customers with SVR Residential Mortgages is €66,532.
60% of permanent tsb’s SVR Residential Mortgage customers have a mortgage of
less than €60,000 and the impact of this rate increase on the average mortgage
[€66,352] will be approximately €17 per month, according to the bank.
Frank Conway of Irish Mortgage Corporation commented:
"It is about a year
since Permanent TSB first launched this wave of rate increases for Standard
Variable Rate mortgage holders and the third in a row for this lender.
For someone with a mortgage of €300,000, this latest increase pushes up
their monthly repayment by €87.81 per month or 1053.72 per annum.
More interesting is that this is the third half-point increase announced
by the lender. And since a year ago, the lender will have pushed up monthly
mortgage repayments from €1264.81 to €1520.06 and increase of €255.25 per month
or €3063 per year on a €300,000 mortgage.
In addition, while the lender will no doubt justify the need to increase
rates, it is taking place against a backdrop of exploding mortgage
delinquencies. There are in excess of 32,000 mortgage holders more than 90 days
in arrears on their mortgage repayments, I expect that overall level of arrears
to exceed at least 100,000 if the 30 days arrears and 60 day arrears are added
in to the overall figures…as well as any 'special repayment arrangement' lenders
may have privately come to with mortgage holders.
I expect to other lenders to announce similar moves in the coming days and
weeks."
