Bank of Ireland increases its SVR by over 50%
Posted on 7 March 2012 by
Bank of Ireland has today announced a 2 stage increase in its SVR from 2.99% to 4.49%, with a 1% increase in June, followed by a further 0.5% in September.
Bank of Ireland and its subsidiary, Bristol & West, withdrew from new mortgage lending in the UK in their own names January 2009 and since then Bank of Ireland’s only UK mortgage lending has been through its long term contract with The Post Office, which includes a requirement to offer mortgages under the Post Office brand.
The current range of Post Office mortgages reverts to Bank Rate + 3.99%, not Bank of Ireland’s SVR, and so this huge increase of over 50% (from 2.99% to 4.49%) in its SVR brings the rate for borrowers who took out a Bank of Ireland mortgage up to its exit from the market 3 year ago into line with its current “revert to” rate.
As a bank which required a bail out and is still making losses the most surprising thing is that Bank of Ireland kept its SVR at 2.99% for so long.
Nevertheless this will still be a massive blow to Bank of Ireland and Bristol & West borrowers, but they are lucky to have enjoyed the 2.99% rate for so long. Many who were very happy to stay with Bank of Ireland while they were paying only 2.99% will now look to remortgage and even those only 15% equity in their property will in many cases be able to find a cheaper fixed rate for up to 5 years or a variable rate.
As a result Bank of Ireland is now likely to see the size of its UK mortgage book decline substantially, which is of course what the Irish Government wants, but one negative is that the quality of its UK book will decline, because only its lower risk customers will be able to remortgage.
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