Why does balance increase on interest-only mortgage?

[Squonk]

I have an interest only loan taken out with Ulster Bank on a rental property that I bought last year.
I recently got my annual statement of account and something is strange.
My opening balance was €240,000 (this is correct)
My closing balance was €240,661 !!

How can my balance increase? I have been paying off the interest?
On the statement UB reduce (?) the balance by €590 each month,my repayment amount. Thus, the statement shows the capaital balance decreasing (huh?). Until….at the end of the year, they calculate the 'interest' owing….which pushes my balance owing up past what it started at.

This is all very confusing to me. How can the amount I owe increase?
I have been trying to contact Ulster Bank for the past few days but have been getting busy lines and transfers. I will continue to try to get an intelligible answer for UB but in the mean time I'd like to run it past you AAM folks...

 

[ClubMan]

Are your interest only repayments fixed or do they fluctuate with interest rate changes? If the former is the case then presumably the ECB rate hike in last 2005 means that you were not actually covering the full interest bill. You'd be better of writing to UB - it's more official and will have to be replied to unlike a phone call/email.

 

[Squonk]

Thanks Clubman....I'm on a tracker. But this statement is only for last year when the ECB rate only changed in December (?) but, as far as I can tell this wouldn't explain the discrepancy?

I'll take your advise re. writing to UB but I was hoping that I could get a quick, simple reason from UB over the phone....maybe I will if I ever get a chance to talk with someone!!