On the same day that the Bank of England kept Bank Base Rate on hold at 0.5% for the 36th consecutive month the Bank of Ireland are the latest mortgage lender to increase their Standard Variable Rates (SVR).
Last week Halifax and Natwest RBS announced increases in their SVR pushing up mortgage costs for over a million customers.
Santander also announced that their SVR would rise, but that the change would only affect new customers and not existing mortgage holders.
Bank of Ireland SVR rise
The Bank of Ireland has announced its SVR will rise by 1.5% to 4.49%.
The rise will take effect in two stages; firstly the SVR will rise by 1% to 3.99% from June 2012 and a further rise of 0.5% will come into effect from September.
The rise is the largest seen so far, with borrowers facing a rise of around 50% in their interest costs.
The move will affect around 100,000 mortgage borrowers who have mortgages with the Bank of Ireland or Bristol & West, but holders of mortgages from the Post Office will not be affected.
The news will be greeted by dismay by mortgage borrowers at a time when households are still suffering the effects of rising prices, particularly fuel, and the effects of the government’s spending cuts.
Standard Variable Rate
The Standard Variable Rate or SVR is often charged to mortgage borrowers who have come off their introductory mortgage deal or who have discounted rates which are linked to their mortgage lenders SVR.
More expensive funding
Mortgage lenders are justifying the rises in SVR by saying that wholesale funding has become more expensive in recent weeks, however many mortgage experts are concerned by a situation where existing mortgage borrowers linked to the SVR are funding competitive deals for new borrowers.