The Bank of Ireland is the next major bank to raise its standard variable rate on its mortgages.
The rate will rise from 2.99 per cent to 4.49 per cent. It will rise in stages; to 3.99 per cent in June and then by a further 0.50 per cent to 4.49 per cent in September. The change will affect 100,000 UK borrowers.
The SVR is a lenders benchmark rate and many borrowers have remained on them after coming to the end of a fixed rate deal or a discount offer.
The move follows the announcement late last week from the Royal Bank of Scotland (RBS) and Halifax. However, RBS raised its SVR by 0.25 per cent to four per cent and Halifax by 0.49 per cent to 3.99 per cent. The RBS move will affect around 200,000 borrowers, whilst Halifax’s increase will affect about 850,000 borrowers.
The increase to the Bank of Ireland’s SVR will increase the monthly payment of a borrower with a £100,000 mortgage by £81.
SVR’s are linked to base rate which has not changed for three years and lenders have said that their borrowing costs have increased significantly in that time.
The Bank of Ireland said the cost of funding mortgages had increased and that its rates remain competitive.
Some SVR rates from lenders such as Lloyds and Nationwide are tied to base rate and therefore cannot change until the Bank of England moves base rate from 0.50 per cent.
The move will increase the likelihood that other mortgage lenders will follow suit.
The change does not affect Post Office customers.
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