IT makes little sense, and it was probably never meant to. At a time when record numbers of homeowners are at the pin of their collars trying to repay their mortgages, lenders are piling on the pressure by hiking interest rates.In the past year alone, mortgage interest costs have shot up by 16.5pc, according to the Central Statistics Office.The CSO only looks at standard variable rates when it examines mortgage costs, so the statisticians are reflecting the pain being borne by those with these variable mortgages.Lenders are free to push up variable rates whenever they want -- something households with these types of mortgages have learned to their costs in the past year.It is hard to get your head around the 16.5pc figure, but what it means is that a family with a not-untypical mortgage of €250,000 has seen the annual cost of repaying it jump by €1,300 in the past 12 months.In monthly repayment terms the original payment of €954 a year ago has now zoomed up to €1,110, based on two separate 0.5pc increases in the past year....This is at a time when the European Central Bank has not moved its main rate off it record low of 1pc since May last year
- What banks need to pay to attract deposits
- What banks need to pay as interest in short and long term bonds to investors
- What banks need to pay other banks for short term borrowings (interbank funds)
Some people on fixed rates are paying up to €600 more a month more than those on variable home loan deals.
But to get out of these deals lenders impose a penalty, called a redemption fee. This is the cost difference between the rate the customer is on (which can be as high as 6pc) and the rate presently charged on its variable rate.
Granted, people locked into bad value fixed rates should have been aware of what they were getting into.
But as enormous flexibility has been shown towards our banks by the State, it is not unreasonable to expect banks to be flexible towards those stuck on fixed rates.
I would hate to enter into any type of wager with Charlie. Could you imagine the rules; "heads I win tails you lose".