HOMEOWNERS ARE bracing themselves for the latest assault on their finances, as lenders prepare to hike interest rates on variable-rate mortgages.
Last year, the crisis facing many mortgage holders, given the downward pressure on interest rates, was how to get out of a fixed-rate mortgage without incurring sizeable breakage fees. Now, however, those who locked in at a reasonable level over the past few years may feel that it wasn’t such a bad idea. Those on variable rates are in line for rate hikes of as much as 1.5 per cent, which would add an extra €300 a month to the average mortgage in Dublin.
How many people would a rate hike affect?
According to the Central Bank, as of last June, 84 per cent (by value) of private residential mortgages in Ireland were at a variable rate, with 16 per cent at a fixed rate.
Given that there are roughly 800,000 such mortgages in Ireland, a rough estimate indicates that 672,000 people are on variable-rate mortgages and 128,000 are on fixed rates.
Will the Government intervene?
If the banks go through with the planned rate hikes, there may be a public outcry similar to that led by homeowners seeking to get out of fixed-rate mortgages last year. However, it is likely that the response from the authorities will be the same.
While the taxpayer now has sizeable shareholdings in both AIB and Bank of Ireland, it is unlikely that the Government would intervene to prevent the banks from raising variable rates. Given the banks’ precarious positions, a return to profitability is seen as essential for the Government to be able to sell its stakes in the banks, and for the taxpayer to exit the banking sector.
As reported by The Irish Times
With deposit rates still high and margins on borrowing low, banks have to find a way to make money,from us one way or another.
This is bound to affect to affect you or some one you know,the government and the banks are not going to help us,so we have to do it for ourselves.
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Great information
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