# Interest rate hikes for AIB, EBS & Haven customers



## Knuttell (24 Apr 2013)

> The move comes a week away from an expected cut in the European Central Bank rate.
> 
> The hike of up to 0.4pc in the State-owned bank’s variable rate will mean a customer with a €300,000 mortgage will be facing an extra €66 in payments from June 1.
> http://www.independent.ie/business/...for-aib-ebs-and-haven-customers-29219870.html



Getting their punches in ahead of an expected ECB rate cut in May,I would expect the others wont turn down this opportunity either.

Full statement

AIB Mortgage Statement

AIB has today (Wednesday, April 24th) announced an increase in its variable mortgage rates by up to 0.40%, effective from June 5th, 2013 while EBS and Haven variable mortgage rates will increase by up to 0.25%, effective from June 1st, 2013. 

While AIB and EBS keep their lending rates under constant review, based on current funding costs the Bank does not anticipate any further variable mortgage price increases in 2013. 

The decision to raise variable rates is driven by the need to ensure the Bank is lending at long term sustainable pricing levels.  AIB’s variable rates have been at unsustainable levels relative to the cost of funding for several years, while EBS has not announced an increase in almost two years.  The Group’s cost of funding is driven by a number of factors including wholesale funding costs and deposit pricing. In the current Irish market environment, deposit pricing is largely decoupled from the ECB base rate. AIB has been working to address the issue of mortgage pricing over a period of time and today's announcement delivers a more sustainable platform for operating performance.  

Following this increase, AIB, EBS and Haven rates will be in line with pricing in the Irish market and will continue to offer customers competitive rates for new mortgage business. 

The average variable rate mortgage for AIB is c. €130,000 and, following this increase, the average monthly payment will rise by c. €24. EBS’s average variable rate mortgage stands at c. €100,000 and this increase represents on average a c. €17 increase in monthly repayments. This increase does not apply to tracker and fixed rate mortgages, which form the majority of the Bank’s Irish mortgage loan book. 

AIB’s Director of Products, Fergus Murphy, said: “AIB is making significant progress in returning to a stable banking model and must apply competitive pricing policies in order to make a return to profitability.  Prior to this increase, AIB had the lowest standard variable rate in the market, but now regrettably must move more in line with market competitors. While AIB and EBS recognise that any increases are unwelcome for customers, we must ensure that mortgages are provided at a sustainable pricing level.”


----------



## PolkaDot (24 Apr 2013)

It's a nightmare. No end to the increases in sight. Will it be long before the rates are up to 6%???!


----------



## bugler (24 Apr 2013)

I thought this would arrive sooner - quite why they seem to try and sync it with a downward cut in the ECB rate baffles me. Is there some logic to it?!

Not long before we hit 5% for sure, whatever about 6%.


----------



## Knuttell (24 Apr 2013)

PolkaDot said:


> It's a nightmare. No end to the increases in sight. Will it be long before the rates are up to 6%???!



Its similar to the drowning man analogy,they are going pull everyone down with them in order to return to profitability and or subsidise the loss making tracker book.

They really do not care,the tax payer will pick up the debris after them.

Good on anyone who has one but real pain for those on a variable.


----------



## bugler (24 Apr 2013)

Here is the AIB statement: [broken link removed]



> Existing Residential Owner Occupier Standard Variable Rate will increase by 0.40 % from 4.00% to 4.40%
> 
> Loan to Value Variable Rates for Owner Occupiers will increase by 0.25%
> 
> ...



That is a very big jump for existing customers on the SVR.

AIB are no longer the cheapest lender.


----------



## ryaner (24 Apr 2013)

This does bring the rates for new customers and existing customers closer, in in cases < 80%, lower. 
Currently < 80% is 4.11%apr. Increase puts it to 4.36% vs 4.4% for existing.


----------



## demoivre (24 Apr 2013)

Knuttell said:


> Getting their punches in ahead of an expected ECB rate cut in May,



And don't forget the carbon tax increase on May 1st, and property tax has to be paid starting in July. I don't think there is a bigger irony than bailed out bankers contributing further to driving this country into the ground by raising rates, when we need every stimulus we can get.


----------



## Dinarius (24 Apr 2013)

I feel so angry about this. Went to AIB in 2006 & asked for a tracker mortgage. Some hair-gelled liar told me they weren't doing them anymore. Turned out they did them until 2008. 

So, we went for a standard variable and have been paying for it ever since. 

We're cast iron both in terms of rating and income, but I am so tempted to default and say sue me. 

Sick of AIB and even sicker of Fine Gael. I will never vote for them again. The combination of the banks and the property tax will be their ticket to the opposition benches. 

D.


----------



## pugwall (24 Apr 2013)

Dinarius said:


> I feel so angry about this. Went to AIB in 2006 & asked for a tracker mortgage. Some hair-gelled liar told me they weren't doing them anymore. Turned out they did them until 2008.
> 
> So, we went for a standard variable and have been paying for it ever since.
> 
> ...




I find your attitude quite selfish and typical of the sort of mé Fein attitude that has our republic in the mess we are in. You signed up for a variable mortgage without carrying out complete due diligence. A mortgage undertaking for most people is the single largest financial transaction of a lifetime and should be taken following appropriate thought and research. 

Have you always voted Fine Gael? Have you always voted for right of centre parties? Fine Gael and Labour have only been in office for just over two year. Is it too soon to judge their legacy? I think so. Who do you plan on passing your vote to ?


----------



## Dinarius (24 Apr 2013)

I'm guessing you don't have an SV mortgage. 

D.


----------



## pugwall (24 Apr 2013)

Dinarius said:


> I'm guessing you don't have an SV mortgage.
> 
> D.



I do. It's with BOI and has increased twice since I moved off the FTB teaser rate. I expect it to increase again as BOI are in a similar position to AIB with regard to profitability. I obviously don't like the fact that it is costing me more but it was always on the cards. Longer term I expect to be paying 5 to 6 per cent interest on the variable. My medium term plan is to over pay and reduce the overall burden.


----------



## reddanmm (24 Apr 2013)

Hi pugwall you seem to relish the fact that interest rates are increasing and like the doomsday peppers you have prepared yourself for it by overpaying .
Not everyone is in that position and another rate hike will push them to the limit .
You cannot blame svr holders for venting especially when there a decease to the ECB rate due soon


----------



## Spear (24 Apr 2013)

Let's assume there was a person on the "average mortgage" who could not afford the extra €24 per month and continues to pay only the existing repayments.  In such a case, what would AIB realistically do?


----------



## greenshooter (24 Apr 2013)

We drew down our mortgage with AIB 10 months ago and over that time they will have increased their variable rate by 1.25%. All that after the ECB reduced their rate over the same period. It's a disgrace that VR customers are picking up the can for the mistakes of others


----------



## Brendan Burgess (24 Apr 2013)

Spear said:


> Let's assume there was a person on the "average mortgage" who could not afford the extra €24 per month and continues to pay only the existing repayments.  In such a case, what would AIB realistically do?



Not a lot. 

They would be obliged to write to you under the MARP at some stage. 

After a year, you would be €300 or so in arrears. AIB wouldn't be too upset. However, your credit rating would be shot and you would end up paying more interest. 

So your best bet is to call them and ask them to extend the term, so that you don't go into arrears.


----------



## ebs_customer (24 Apr 2013)

*Middle Class Social Welfare*

It's high time there were widespread redundancies and salary cuts at the bailed out banks in order to lower costs.

They are obviously not doing a fraction of the business they did during the boom yet they still maintain huge numbers of staff on high wages at the tax payers (and mortgage payers) expense.

The EBS branch network should be closed immediately as it serves no purpose now that EBS is part of AIB.


----------



## casey (24 Apr 2013)

Is there no limit to how high can the variable rate go? Wouldn't it be suicidal to sign up for mortgages with variable rates then?


----------



## Bronte (25 Apr 2013)

greenshooter said:


> We drew down our mortgage with AIB 10 months ago and over that time they will have increased their variable rate by 1.25%. All that after the ECB reduced their rate over the same period. It's a disgrace that VR customers are picking up the can for the mistakes of others


 
But you knew all this before you took the loan?  Were you not stress tested on the interest rate by at least 2% meaning you can afford this increase?

____________

As an aside, by what percentage have banks stress tested customers in the last year.  If it's only 2% and these banks know there is a slight chance of an ECB rate rises then 2% is fine, but they also know that they themselves fully intend to hike rates regardless then their stress testing should be a lot higher than 2%.


----------



## Spear (25 Apr 2013)

ebs_customer said:


> It's high time there were widespread redundancies and salary cuts at the bailed out banks in order to lower costs.
> 
> They are obviously not doing a fraction of the business they did during the boom yet they still maintain huge numbers of staff on high wages at the tax payers (and mortgage payers) expense.
> 
> The EBS branch network should be closed immediately as it serves no purpose now that EBS is part of AIB.



The option of reducing operational costs should really be exhausted in a timely manner at this stage. It seems that AIB are picking the path of least resistance, ie the SVR holders. I wonder what the government or regulator should do? In the UK the regulators might be able to push back on the banks on the basis of not ' treating customers fairly'.


----------



## bugler (25 Apr 2013)

casey said:


> Is there no limit to how high can the variable rate go? Wouldn't it be suicidal to sign up for mortgages with variable rates then?



Yes, it would. In any other context someone signing up to a lengthy contract with an institution that can unilaterally hike the cost to the other party would be viewed as a fool. Here, it is the only option and people seem nonplussed about signing up for this. Also, it is yet another obstacle facing Irish borrowers that Mr Elderfield was not the slightest bit interested in.

For many this rate rise will have a greater impact than the removal of the PRSI allowance, or even the introduction of the property tax.


----------



## Bronte (25 Apr 2013)

bugler said:


> Yes, it would. In any other context someone signing up to a lengthy contract with an institution that can unilaterally hike the cost to the other party would be viewed as a fool.


 
Actually you can avoid this by going for a fixed rate.  I did many times and actually looking back I'd have been better off financialy if I'd gone the variable route.


----------



## bugler (25 Apr 2013)

It doesn't change the fact that banks have people over a barrell. And signing up to a contract that can go up by €100s of euro a month over time at a lender's whim should not be an available option to residential borrowers.

Variable rate mortgages should be banned on the grounds they are unfair practice, predatory lending, call it what you will.


----------



## reddanmm (25 Apr 2013)

From what i remember banks have made their fixed rate options very unattractive in the last few years . Maybe someone could do a table of the fixed rate options from the banks .


----------



## kormak (25 Apr 2013)

I'm afraid this could be the straw that broke the camel's back for us...
In the last year we've been suffocated into arrears by this rate increases. Still making full payments but just about...
Tracker was not an option for us when we got our mortgage and we fixed for 3 years and still are finding it impossible to keep affloat.

One solution that is being circulated is a tweaking of TRS for mortgage holders. i.e 
a reduction after a certain point for those on trackers and an increase for SVR holders.
I know the Tracker mortgage brigade will snarl at this idea but as it stands it is simply not fair that SVR mortgage holders are been shaken upside for all their income to fund the gap that trackers have created.
... And you can say what you like about SVR going up/down, etc... and we should be prepared for it.Yes! may be we should but I aint got a salary increase since 2008.
Since then the cost of fuel, childcare, tax, VAT, stealth tax, living, have ALL increased on top of property taxes, household charges, etc...
It's painful to watch this play out in front of you and no one in Daíl giving a toss.
Never again will I vote Fine Gael, never!


----------



## Pinkpanter (25 Apr 2013)

Mortgage interest relief is calculated on the interest payment.
Our tracker mortgage interest relief has dropped substantially with the 
falling rates. Therefore if your interest portion of mortgage is high due
to higher interest rates you get a higher payment. Not much to be happy 
about I'm afraid!


----------



## Dinarius (25 Apr 2013)

bugler said:


> For many this rate rise will have a greater impact than the removal of the PRSI allowance, or even the introduction of the property tax.



Sums up this mess very neatly.

D.


----------



## Knuttell (25 Apr 2013)

kormak said:


> Never again will I vote Fine Gael, never!



You need to be looking at Fianna Fail if you want to blame a political party,those are the guys who have landed us in this almighty mess.

Fine Gael are now doing the spade work trying to sort it out and because its all so fubared the fix will be painful to the nth degree for most of us.


----------



## Techhead (25 Apr 2013)

Sadly there is no leadership and joined up thinking from the government . We are on our own here.


----------



## kormak (26 Apr 2013)

Knuttell said:


> You need to be looking at Fianna Fail if you want to blame a political party,those are the guys who have landed us in this almighty mess.
> 
> Fine Gael are now doing the spade work trying to sort it out and because its all so fubared the fix will be painful to the nth degree for most of us.



Ha! I certainly won't be votoing for them either...
No, sorry but I've had cases/queries/issues which impacted me and my family greatly, dismissed by this Fine Gael govt. ministers to learn my lesson.
Never again!


----------



## cbyr1983 (29 Apr 2013)

In all of this, Has anyone undertaken any analysis of the value of fixed rates in retail mortgages?

It would have to be point in time but it would interesting to see what total interest was paid by the person who locked into a, say 3 year rate in 2010 versus the person with the same mortgage on svr. 

I'd guess the svr holder is better off now. There seems to be a premium payable for hedging. As for trackers, sure it's irrelevant unless you were, dare I say it, mis-sold an svr instead of a tracker when it was available at the time.

I have an ltv/svr just over a year with AIB and the increases are sickening but the alternative fixed rate was not palatable and they were the cheapest in the market at the time. I'd be more annoyed if I had fixed for a year and was coming off now at the higher rate, but perhaps someone knows if I'm blissful in my ignorance?


----------



## rayn (29 Apr 2013)

I paid 18% on my mortgage at one stage. Was just able to cover it with difficulty because I did not over extend myself. If you can't afford a doubling of the mortgage rate you should rent a little longer.


----------



## emeralds (29 Apr 2013)

rayn said:


> I paid 18% on my mortgage at one stage. Was just able to cover it with difficulty because I did not over extend myself. If you can't afford a doubling of the mortgage rate you should rent a little longer.



So did we...what a few months that was!


----------



## demoivre (30 Apr 2013)

rayn said:


> I paid 18% on my mortgage at one stage. Was just able to cover it with difficulty because I did not over extend myself. If you can't afford a doubling of the mortgage rate you should rent a little longer.



Ah nice to see someone showing the same prudence as the bankers did with their lending criteria in the boom times, supported by the central bank, regulator and government........oh wait.


----------



## Dobeirne (7 May 2013)

The official AIB/EBS justification for the rate increase has a rather hollow ring to it. The need to put their mortgage lending on a sustainable footing has been driven not so much by the need to cut their costs and bring rates into line with competitors, as the requirement to backfill the catastrophic losses created by their rush to promote trackers (essentially a marketing strategy that aimed to grow market share, but in essence was always of marginal commercial value to the banks). 

The EBS - originally a mutual society created to fund the purchase of homes by working people - took a punt on commercial lending. It got it wrong and now it's customers and the Irish people in general are picking up the tab. The EBS and AIB made a call in terms of promoting tracker mortgages - again they got it wrong - and this time a sub-set of their customers are paying the price. 

The term usury springs to mind - defined as "The illegal action or practice of lending money at unreasonably high rates of interest." At a time when ECB rates are at historically low levels - unreasonable would accurately describe a European bank's decision to move its rates in the opposite direction.


----------



## PolkaDot (8 May 2013)

Dobeirne said:


> The official AIB/EBS justification for the rate increase has a rather hollow ring to it. The need to put their mortgage lending on a sustainable footing has been driven not so much by the need to cut their costs and bring rates into line with competitors, as the requirement to backfill the catastrophic losses created by their rush to promote trackers (essentially a marketing strategy that aimed to grow market share, but in essence was always of marginal commercial value to the banks).
> 
> The EBS - originally a mutual society created to fund the purchase of homes by working people - took a punt on commercial lending. It got it wrong and now it's customers and the Irish people in general are picking up the tab. The EBS and AIB made a call in terms of promoting tracker mortgages - again they got it wrong - and this time a sub-set of their customers are paying the price.
> 
> The term usury springs to mind - defined as "The illegal action or practice of lending money at unreasonably high rates of interest." At a time when ECB rates are at historically low levels - unreasonable would accurately describe a European bank's decision to move its rates in the opposite direction.




I agree with you. But what can we do about it? Already, this issue appears to be forgotten about. There was a bit of negative press for about 24 hours after the announcement, but that seems to be it now, all forgotten about.

I suppose we could all write to our local TDs asking the government to intervene. But is that going to result in any action? Unlikely.

I would be interested to hear what people have done/are planning to do to protest/fight these interest rate increases.


----------



## Dobeirne (8 May 2013)

Yes - letters to TDs and the EBS / AIB definitely in order. However, I think a more organised campaign is called for. Social networks spring to mind in the first instance. I'm looking into setting up a Facebook page - perhaps build out from that.


----------



## Tebbit (9 May 2013)

I've already written to my local Fianna Gael td and so far no reply. I see no point in writing to AIB / EBS as they don't give a damn, they'll do what they can get away with & and this government seems to let them away with everything. I am in the process on moving my current a/c from AIB in protest ---this is the only form of protest they will understand-where it hits them in their pockets.


----------



## bugler (9 May 2013)

You will have a hard time getting traction for any specific protest against AIB/EBS. It is not like they are outliers. Should BoI customers be protesting too? They pay the same SVR as AIB customers (in fact slightly more). 

The rates are now much of a muchness. And that does not a solid platform for a campaign make.

Morgan Kelly foresaw some of the "conflict" that would occur between varying categories of mortgage holder (no one else seems to have any interest even now). There are several categories of mortgage holder, and those currently on SVRs are going to be bled to compensate for those on trackers and any other borrowers costing the banks, such as those in arrears and/or those who will have debt restructured.

Also, there are people who cannot or will not pay their mortgages - these obviously cost the banks money. If banks are facing losses (some government imposed by virtue of being directed to act in certain ways to the benefit of those in a _specific_ mortgage category) they are going to seek ways to offset them. And guess who is a good source of money? Those on trackers? Those in arrears or interest only? Those in MARP? No - it's you and your SVR. 

People tend to view all the subtopics of the current mortgage crisis as separate, when they are connected. The issue of repossessions and debt restructuring are quite relevant to someone's SVR rate, whether the borrower recognises it or not. 

If you are in arrears there has been huge government pressure to allow you time to recover. If you cannot meet your mortgage repayments and other debts there is pressure for you to retain your family home (remember, repossession is a "last resort") and get your debt restructured and maybe even written off. 

But if you're paying your SVR dutifully each month? You might as well paint a target on your bank, and the government (or any politicians) don't give a damn.


----------



## elcato (9 May 2013)

I had savings with them from the anglo legacy which I closed in protest recently. They did actually ask why I was closing mind you , for 'morketing' reasons.


----------



## Dinarius (10 May 2013)

Setting up Facebook pages by constituency might be a way to go.

If the incumbent FG or Labour TDs could see how may SVR votes might be lost at the next election, it might focus their minds.

D.


----------



## kmce (30 May 2013)

hi all
I am meeting my local TG ( fine gael) to discuss this today
I wrote to him in May to express my anger and EBS increasing their SVR when the ECB have reduced the rate.
Any tips on how to approach this with him would be much appreciated.
rgds
k


----------



## Spear (30 May 2013)

Ask him: Why are AIB/EBS being allowed to run as commercial organisations when most of their loan book [trackers] is and will not be ever profitable?


----------



## kmce (31 May 2013)

hi there
met him and got the usual speel about the banks needing to return to profitabiltity so we the tax payer and get back what we have invested in them.
He understood my frustration at rising standard variable rates and implied tax credits may be the way to go - dont hold out much hope
IF EBS can never be profitable and we own it can the government not use it to support those of us in negative equity and on SVR by moving us on to trackers and  giving us some breathing space .I am not looking for  write down or debt relief. I just want to pay off my mortgage at the same rate as 400,000 tracker holders?


----------



## SwordsMan (31 May 2013)

kmce said:


> hi there
> met him and got the usual speel about the banks needing to return to profitabiltity so we the tax payer and get back what we have invested in them.
> He understood my frustration at rising standard variable rates and implied tax credits may be the way to go - dont hold out much hope
> IF EBS can never be profitable and we own it can the government not use it to support those of us in negative equity and on SVR by moving us on to trackers and giving us some breathing space .I am not looking for write down or debt relief. I just want to pay off my mortgage at the same rate as 400,000 tracker holders?


 

think letting off steam is better place. . What were you expecting him to say.. banks are evil, vote for me and your problems will go away and had to laugh at ur last 2 lines....and btw, im on SVR ., mortgaged up to my eye balls.


----------



## Tebbit (31 May 2013)

well I wrote to my local FG td and finally got a reply---it was a long spiel of copy and paste baloney. Didn't care, not my problem was the gist of it. I 100% WON'T vote FG again, I wish there was a new party to vote for. All the others appear to be basically the same.


----------



## thunder (18 Jul 2013)

I emailed my local fine gael td re increase in variable rate mortgages. I also got the standard reply, copy and paste , the business of banking is not to be interfered with by the government etc. While this bunch of cowards are in power  nothing will be done about increases in variable mortgages. It seems nobody is in charge so there is no knowing where interest rates could end up.


----------



## Dinarius (19 Jul 2013)

Variable mortgage rates could cost them the next election. I, for one, will never again vote FG regardless of where rates go.

Thing is, they sail off into the sunset with their pensions for life. Once you cross the finishing post at the ballot box, failure is no longer an issue. Pity.

D.


----------

