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Mortgage Interest rate hikes!

  • 17-06-2008 2:50pm
    #1
    Closed Accounts Posts: 39


    I am close to closing on an affordable housing property and have just got off the phone with EBS with whom I have arranged a 3 year fixed term mortgage. They have just informed me that their rate increased by about 0.8% on Friday. This equates to about an extra €150/month!!

    Is it just me or is this a huge increase for them to make all at once?? Has anyone heard of other banks increasing their rates by this much??


Comments

  • Registered Users, Registered Users 2 Posts: 2,808 ✭✭✭Ste.phen


    I believe a lot of the banks upped their rate last week when the referendum results were the big news


  • Moderators, Education Moderators, Society & Culture Moderators Posts: 18,986 Mod ✭✭✭✭Moonbeam


    It is part of buying a house:(
    I have had 9/10 rate hikes since I bought mine in 2004.
    your mortgage must be absolutely huge if 0.8% = 150 euro a month.
    Shop around if you can or see if their tracker is any cheaper.
    Don't forget to claim trs either:)

    Good look with the house


  • Closed Accounts Posts: 39 gavdbyrne


    Well it's gone from about 1450 to just under 1600! The 3 year fixed was the best I could do with the amount I needed to borrow against what I earn... they initially only offered me a 5 year fixed but that is just too long to be locked into. They won't offer me any variable or tracker rates.

    It's a 3 bed so I will be renting out a room to help, but it's still a big jump.

    Is there any point in trying to get them to give me a rate somewhere inbetween the old and new rate seeing as I am hoping to close within the month?


  • Registered Users, Registered Users 2 Posts: 980 ✭✭✭stevedublin


    Moonbeam wrote: »
    your mortgage must be absolutely huge if 0.8% = 150 euro a month.

    I'd calculate a mortgage of 225,000 euro. Not huge by todays house prices.


  • Moderators, Education Moderators, Society & Culture Moderators Posts: 18,986 Mod ✭✭✭✭Moonbeam


    Can you go to a different lender and see what rates they can offer you and let EBS know that you are shopping around.
    Umm I may be way off here but simple maths would suggest that is far from a 0.8% rise?

    I think someone has calculated something incorrect along the way...


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  • Registered Users, Registered Users 2 Posts: 711 ✭✭✭BOHSBOHS


    record eurozone inflation means more interest rate hikes on the way folks :pac:


  • Closed Accounts Posts: 39 gavdbyrne


    It's 280k over 35 years, went from 5.19% upto something like 5.97%

    I am limited to EBS, Bank of Ireland, and IIB, and from looking at their current rates these seemed to have raised theirs aswell. I used the mortgage calculator on IIB and it works out at pretty much the same monthly repayment as EBS http://www.iibbank.ie/homeloans/.

    Also, it was hard enough to get the 280k with the lower rates, I'm sure the new higher ones will effect how much other banks will lend me if I start looking for quotes again.

    I guess I have to just take the hit and try get it closed out before any further interest rate rises are announced!


  • Closed Accounts Posts: 3,494 ✭✭✭ronbyrne2005


    Are you able to make new higher repayments from income without having to rent a room? Good luck making new payments, have a read around on askaboutmoney and propertypin for advice on long term mortgage options etc.


  • Registered Users, Registered Users 2 Posts: 1,003 ✭✭✭Treehouse72


    I'm sure OP knows this, but these hikes in mortgage rates are not as a result of a rise in actual interest rates, but rather are the result of banks passing on higher costs incurred since the credit crunch.

    So there is worse to come.

    It is almost certain that IRs themselves will be raised by .25% by the ECB next month, and there is a strong possibility of another raise in September. So it is likely we'll see another .5% on IRs by year's end, and some markets have priced in a third rise by March '09. So there could be a total .75% rise in the next 6-9 months.

    I am not sure whether banks ever add a little bit extra on for themselves when IRs rise, but that's not impossible either.


  • Moderators, Society & Culture Moderators Posts: 32,286 Mod ✭✭✭✭The_Conductor


    I am not sure whether banks ever add a little bit extra on for themselves when IRs rise, but that's not impossible either.

    Highly unlikely- particularly since RBS entered the marketplace here, its incredibly competitive. Yes, the banks fleece us senseless here, but they are getting quite inventive in how they do it. Baseline rates tend to be reasonably competitive, its the background stuff- mortgage assurance policies, overdraft rates, credit card surcharges etc. that murder us all.

    By the way- its only the tracker rates that automatically mirror the ECB moves, the variable rate mortgages are securitised at prevailing rates several times during the year- so its those products that are more likely to get larger rises (the banks can actually pass on the additional costs associated with them quite successfully)......

    It was sneaky ushering the variable rate rises in on the coattails of the no vote- but its what happens. The bad news got lost in the static- its a well known ploy.


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  • Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    Watch out for rates that track the Euribor(think it was this) rather than the ECB rate, IIB have been known to do this trick.
    280k mortgage for a single(assumption) person on an affordable house is indeed huge.


  • Registered Users, Registered Users 2 Posts: 3,470 ✭✭✭DonJose


    gavdbyrne wrote: »
    It's 280k over 35 years, went from 5.19% upto something like 5.97%

    All indications show the ECB will increase interest rates over the summer, they could even rise at the next ECB meeting in July.


  • Registered Users, Registered Users 2 Posts: 239 ✭✭Mitzy


    gurramok wrote: »
    Watch out for rates that track the Euribor(think it was this) rather than the ECB rate, IIB have been known to do this trick.
    280k mortgage for a single(assumption) person on an affordable house is indeed huge.

    This should only apply to commercial loans not on homeloans.
    Have you looked at First Active? They have good fixed rate options at the moment. They are a bit of a nightmare though as they are very slow. Nearly every lender have increased their rates dramatically in the last 2 weeks due to the credit crunch - it's simply the way things are going for the time being :(


  • Registered Users, Registered Users 2 Posts: 723 ✭✭✭finlma


    I was in the exact same position with EBS last week. We're close to closing the deal on the 3 year fixed and got that hike. We have been to First Active since and have agreed on a 5 year fixed rate of 4.95%, the lowest around from what I can see. You'll have to move quick cause I have a feeling it will jump soon enough. Good luck


  • Registered Users, Registered Users 2 Posts: 620 ✭✭✭BobbyD10


    I would not be suprised to see lenders standard variable rate hitting 6.5%-7% before the year end....!!!!

    It's along time since we've seen these kind of rates.

    If you can fix at a relatively decent rate circa 5% I'd take it.


  • Moderators, Society & Culture Moderators Posts: 32,286 Mod ✭✭✭✭The_Conductor


    BobbyD10 wrote: »

    If you can fix at a relatively decent rate circa 5% I'd take it.

    Or get a baserate tracker of less than 1%.......... Do it.........


  • Registered Users, Registered Users 2 Posts: 33 Villa82


    I am in the process of buying a house. Ready to close down the mortgage once the papers are signed possbily in the next 2-3weeks. With E*S I got a Tracker 5.69% ( Ecb rate + 1.44%) for 35 years. I actually think they mentioned something in the small print on the doc's i rec'd about the Euribor. Maybe E*S can change this rate of 1.44% as they wish or track the Euribor instead of the ECB Rate?

    Any ideas?


  • Registered Users, Registered Users 2 Posts: 33 Villa82


    Hi,

    I have the exact wording from my loan offer form I mentioned above. It states:

    "We (E*S) dtermine that the 1 month EURIBOR rate is more than 0.25% above the ECB rate for a period of greater than 30days, then at our sole discretion we may substitue the 1 month EURIBOR rate for the ECB rate. This means that from a certain date, the interest rate on your Loan wil track the 1 month EURIBOR rate in place of the ECB rate. If we determine that the 1 month EURIBOR rate is less than 0.25% above the ECB rate for a period of greater than 30 days, the tracker interest rate will revert back to tracking the ECB rate."

    Im not really sure what this means? And am would I actually be better with a straight forward variable rate instead of the above??? Any input would be greatly appreciate. Cheers


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