The Bank has been in contact with the 13,500 customers who will be affected by the rate increases on its base rate Tracker mortgages, most of which have a loan buy-to-left.
The announcement, which has provoked anger, comes despite the Bank of England base rate stands at a low 0.5 per cent record for four years.
The development means that the left holder buy-to-a mortgage who is currently on an interest rate typical of 2.25%, consisting of the base rate plus 1.75%, will see their rates go up to 4.99% from May 1. Residential mortgage customers will see their rates eventually jump to 4.49% based on the current rate of the Bank.
The increase will be introduced in two stages for residential customers. On 1, the rate will be bank rate plus 2.49 per cent, followed by a further increase to bank rate plus 3.99% on 1 October. Buy-to-let customers will see their rates increased the discount rate more 4.49% on 1 May.
The changes are 7% of customers of Mortgage Bank of Ireland, UK and most of those affected have plenty of equity, amounting to 40% or more, said the lender. The move comes at a time where many mortgage lenders have reduced their rates because of a Government plan to unlock the loans.
Bank of Ireland blamed the increased financing costs increases and the need for banks to maintain higher capital levels. It has set up a hotline for anyone who is concerned about the impact of the changes.
Andrew Montlake, a Director at broker Coreco, describes the movement as "shocking".
He told the BBC: ' less affected borrowers are coming in a competitive environment with the options, but it is suddenly extra foot in the teeth for borrowers who, through changes in circumstances, it would be difficult to pass.?
The increases do not affect customers who have a mortgage loan through the post, which has signed a financial partnership with the Bank. Customers who are concerned about the impact of the increase in can call the hotline of the Bank of Ireland on 0800 345 7512.
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