Permanent tsb has today confirmed that it is to hike the monthly mortgage repayments of almost 80,000 residential customers.
The institution is to raise the interest rate on its standard variable mortgage rate (SVR) and a number of related products by ½% from 3.19% to 3.69% from February 1.
It is expected that other mortgage providers will now follow suit.
Speaking today, David Guinane, chief executive of permanent tsb bank, said that the decision to increase rates had been forced on the bank as a result of the continuing high cost of funds.
“We will of course work closely and sympathetically with any customer who has financial difficulties but we must face up to our own financial challenges also,” he said.
“To persist with uneconomic margins on this product at a time when the bank is losing money would be irresponsible and would result in larger problems down the line.”
In the six months to June 2009, permanent tsb’s banking business reported an operating loss of €132m and is expected to report full year losses ahead of this.
“While the bank sources funds from a variety of sources, the overall cost of funds continues to be substantially higher than the official ECB interest rate,” claimed a statement from the company. “For example, permanent tsb is currently paying up to 3.35% for retail deposit funds. This is higher than the bank’s Standard Variable Rate [SVR] mortgage of 3.19%.”
The decision to increase rates will add an average of €15 per month on a customer’s repayments, according to permanent tsb.