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Bank of Ireland increases SVR from 2.99% to 4.49%

Bank of Ireland has become the latest lender to increase its standard variable rate, increasing it from 2.99% to 4.49%.

Bank of Ireland has notified customers of its intention to increase the SVR on its UK residential mortgage book by 1.5%. 

This change will be implemented in two stages and will affect 100,000 of its customers.

From June 2012, the SVR will increase by 1% from 2.99% to 3.99% and then from September 2012, the SVR will increase by a further 0.5% from 3.99%to 4.49%, the increase however will not affect Post Office customers.

The bank says the cost of funding mortgages has increased significantly for UK lenders in recent years and for this reason, it is necessary for the bank to increase its SVR.

In a letter to customers, the bank says if borrowers wish to review their mortgage as a result of the increase they can contact their local broker, or alternatively, the bank has arranged for London & Country to provide them with a free no obligation mortgage review.

Last week Halifax announced that it was increasing its SVR from 3.50% to 3.99% on May 1, affecting some 850,000 customers.

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  • Cristel 12th March 2012 at 2:52 pm

    Not everyone has had their mortgage for years, I have only just come off a fixed rate of 6.29%, I bought a property that needed modernisation and so far have lost £33,000 on my home, which incidentally is still in need of modernisation, because other things went wrong after purchasing! It is daylight robbery, I did not buy to let and I did not even know BoI was even looking at taking over my mortgage let alone know they actually had until it was too late. I am in negative equity and cannot go anywhere and BoI will not give me another fixed rate. Yet more greed from those who got us into this mess in the first place, I hope BoI goes under completely!! They are disgusting human being but obviously those at the top end don’t give a toss!!

  • Anonymous 9th March 2012 at 2:54 pm

    Banks are businesses, they are not charities, they exist to make money, really it is that simple! Absorb the payment increase, remortgage to another lender or go into arrears and get repo’d. In 2008 the average SVR was typically around 7%, so rates are still low, anyone who still thinks that the BOE rate has anything to do with mortgage rates (accept for trackers) knows nothing about mortgages. It is greed that caused this whole situation, the greed of the bankers selling toxic mortgage backed securities, but also the greed of the borrower choosing interest only as it meant they could ‘afford’ to borrow more (admittedly aided by greedy brokers). However, greed will eventually make people forget about the tough times and without trying to sound too much like Gordon Gekko, it is greed that will eventually get us out of this mess.

  • DS 9th March 2012 at 12:46 pm

    I agree with Rob Knight – I am one of the people stuck with BOI in negative equity!
    I just called them to ask if they are doing anything to help their customers – they are not allowing term extensions and will not let me change to Interest Only.
    However I was told that if I write a letter in to BOI explaining why I cannot afford to meet the new increased payments then they will look at my case individually to see if we could come to some sort of arrangement.
    Also regarding the serviceability, since I took the mortgage out I have been made redundant and have had to take a job on lower pay (I work in the mortgage industry!) so the low SVR originally worked in my favour, but I knew it couldn’t last forever!

  • Dawn 9th March 2012 at 12:45 pm

    I agree with Rob Knight – I am one of the people stuck with BOI in negative equity!
    I just called them to ask if they are doing anything to help their customers – they are not allowing term extensions and will not let me change to Interest Only.
    However I was told that if I write a letter in to BOI explaining why I cannot afford to meet the new increased payments then they will look at my case individually to see if we could come to some sort of arrangement.
    Also regarding the serviceability, since I took the mortgage out I have been made redundant and have had to take a job on lower pay (I work in the mortgage industry!) so the low SVR originally worked in my favour, but I knew it couldn’t last forever!

  • peter stimson 9th March 2012 at 11:39 am

    As usual a mixture of shock, indignation and complete ignorqance by most of the commentators

    Bank of Ireland is partly owned (15%)by the Irish state because in essenece it went bankrupt and recieved some 4.2bn euros in capital support. Irish banks have to deleverage some 73Bn euros to reduce their reliance on cheap EU funding and and reliance on the Irish central bank

    Providing cheap mortgages to UK (not Irish) customers, isn’t part of their remit, making the bank financially viable is. Their obligation is to the Irish state and shareholders, not mr and mrs Smith in Birmingham

    Oh, and by the way, who sold customers mortages that reverted onto SVR? Oh yes, most of you commenting…

  • AS 8th March 2012 at 3:59 pm

    @ Rob Knight

    If a customer can only service their mortgage payments at 2.99%, not 4.49%, it poses the question whether they are living beyond their means in the first place. It is likely that their rates were higher than this at one point. Also, most other SVRs are in the region of 4.00% – 4.50%, other borrowers in negative equity will still be paying these rates etc. so while it must be frustrating for these customers, if I was an Abbey SVR holder, I’d consider BoI clients lucky to have been able to pay such a low rate.

    Maybe they should have continued their payments at the same level and overpaid?

    Secondly, although the BoI no longer lend as BoI, they still have their contractual agreement to provide Post Office mortgages, but I’d guess they’re trying to recpapitalise.

  • Colin Payne 8th March 2012 at 10:47 am

    Anon: 9.07

    The floor only relates to Nationwides tracker rates and not the BMR which is set in stone at 2% above bank rate. The floor was 2.75% but temporarily reduced due to falls in bank rate.

  • Geoff Capes 8th March 2012 at 10:02 am

    I think this rise in SVR will have a lot to do with the fact that Bank of Ireland is owned by the Irish Government. Considering the financial situation in Ireland they will certainly want to see more income coming in but hope that those affected can find an alternative!

  • Colin Payne 8th March 2012 at 9:07 am

    you need to remember that Nationwide from recollection had a floor of 2.75/3% which they decided not to impose. They could always re-impose the floor and increase their BMR – thats my take on it!

  • Mortgage nut 7th March 2012 at 9:54 pm

    I think u need to find out who the beneficial owner is relating to the mortgage – is it nationwide subsid? And find out what their cost of funding is- and Check whether those clauses are treat customer fairly compliant

  • stuart 7th March 2012 at 6:31 pm

    @ Mary Lockyer
    I doubt if NBS can alter their BMR as it is fixed at 2% above BofE base Rate, However their SVR is set at their discretion and I would not be surprised to see that move upwards

    Taken from NBS website “Both are variable rates which we may vary in accordance with our mortgage terms and conditions. However, the BMR is guaranteed to be no more than 2% above the Bank of England base rate, whilst the SMR has no upper limit or cap. If you choose to switch to a new product, it is not possible to switch back to the BMR at a later date.”

  • Mary Lockyer 7th March 2012 at 5:29 pm

    It will be most interesting if Nationwide do this to those on the 2.5% as I recall the mortgage offer stated the variable rate would not exceed 2% above BOE rate, and there will a huge outcry if they renege on this, the biggest problem will those on Interest Only mortgages above 50% and 75% without payment vehicles, I can hear the ambulance chaser vans coming right now.

  • Mary Lockyer 7th March 2012 at 5:29 pm

    It will be most interesting if Nationwide do this to those on the 2.5% as I recall the mortgage offer stated the variable rate would not exceed 2% above BOE rate, and there will a huge outcry if they renege on this, the biggest problem will those on Interest Only mortgages above 50% and 75% without payment vehicles, I can hear the ambulance chaser vans coming right now.

  • Gareth E K Smith 7th March 2012 at 5:19 pm

    What happens to those customers that have it in offer that the rate is to be +2.49% above the B.o.E rate.

  • asd 7th March 2012 at 5:05 pm

    haha Mr P Ennis

  • craig 7th March 2012 at 5:03 pm

    could not agree with Rob Knight more!!! 1.5% is making a mockery of the current situation. I wonder how many customers they have in total

  • Brian Melling 7th March 2012 at 4:34 pm

    No doubt customers – and the media- will complain about this rise. It must be remembered that a good broker checked affordability when customers took out these mortgages at well over 5%.
    That same broker can now advise on how to keep payments lower. I do feel for negative equity clients who cannot move away from BOI, although some of these will only be so because they went interest-only – to save money!!

  • Kevin Vella 7th March 2012 at 4:31 pm

    This has to hurt, a survey from money supermarket stated that savings from mortgage payments were being spent on rising fuel, food and utility costs.

    I disagree With Mr P Ennis that people have had it good for too long, quite the opposite , since 2008 we have been on a downward spiral with employment & earnings greatly affected. For many of those affected this must add to their financial mire.

  • Robin Banks 7th March 2012 at 4:26 pm

    As a mortgage advisor and a former Bristol and West and now BOI customer I have just got off the phone to a BOI staff member if Bristol. Apparently, the reason why they can do this is they have no one with ERC’s now and their terms and conditions state that once you are off a product they can ‘change their terms and conditions.’

    In short, they have done this because Halifax and co got away it and its a great way of making money and getting rid of your mortgage clients because that is their priority.

  • Ancient Wisdom...is a mortgage broker in N3 7th March 2012 at 4:23 pm

    Rob Knight is spot on.

  • Rob Knight 7th March 2012 at 4:08 pm

    What a disgrace. A good proportion of people stuck on SVR are in negative equity and cannot simply transfer to another provider and obtain a more competitive Interest rate, I think we will start to see an Increase in mortgages being defaulted on as they can just about service payments at their current level, It’s not as though BOI are lending any more in the UK so how can they say money is becoming more expensive to borrow when they are refering to the existing book?

  • Tom Merritt 7th March 2012 at 4:06 pm

    Will this effect all old Bristol & West Mortgages? as Bank of Ireland took these over back in 2007.

  • DT 7th March 2012 at 4:03 pm

    Swop rates are over 3% so it is just a surprise that it took them so long. Nwide lower SVR is base tied but other than this linked or tracker rate, the BoE Base Rate is irrelevant. BoE should never have made t so low – it has created an unfair situation of lucky or unluky borrowers!

  • Mr Paul Ennis 7th March 2012 at 4:00 pm

    Hope this increase doesn’t affect people to badly, however, many have had it good for so long, and should have been prudent and either saved a bit or paid down the mortgage. I’m no fan of lenders, but there isn’t a printer in ‘bank h/o’ which prints money, it has to come from somewhere, they are not a charity, its called business. The banks made peoples dream come true to buy a property, time to start taking ownership and start repaying.

  • Jim H 7th March 2012 at 3:56 pm

    It will indeed be interesting to see if C&G do decide to follow suit consdiering their mortgage handbook states “If you are on a SVR, With C&G mortgages it is guaranteed that the SVR will be no more than 2% above the BOE base rate”.

  • Steve 7th March 2012 at 3:56 pm

    The greedy, vermin banks strike again. Anything to justify their bonuses. The Government should intervene because the this level of increase shouldnt be allowed to happen. All I can see is arrears accruing once again. Hopefully, if their is another run on a bank, then the Government shouldnt provide future lifelines and let the bank fail. Treating customers fairly was supposed to have been implemented years ago but this is obviously not the case

  • Shaks 7th March 2012 at 3:53 pm

    Robbing ba****ds!!!!!

    BOI is in deep doodoo and wants to get as many people as possible to redeem.

    The cost of borrowing does not reflect the massive increase they are imposing.
    Here comes the revolution.

  • Avenue & Co Private Finance 7th March 2012 at 3:36 pm

    A hike in rates by this amount? its shocking !!

    BOI recently transferred a tranch to TMW and the rate increase was higher.

    This equates to an over 50% increase in mortgage costs for borrowers – and will cause misery for borrowers and lenders alike – lenders should not be allowed to do this.

  • Robert Lundon 7th March 2012 at 3:32 pm

    you cannot tell me the Bank of Ireland is paying 4% over BOE base rate. This is just getting stupid . If they are not careful what will happen as it did with Northern Rock the good paying low LTV customers will leave and they will be left with the rubbish.

  • colin 7th March 2012 at 3:30 pm

    potentially good news for brokers that lenders are whacking up SVR rates but not so good for clients!!!!!!!, i ve got a whole legacy of clients on Nationwide & C&G at 2.5%, surely these lenders are likely to follow suit!!!