Massive rate shock hits 100,000 MORE as Bank of Ireland and Bristol & West borrowers face 50% hike in their monthly payments

Published 07th Mar 2012

Bank of Ireland and Bristol & West borrowers are the latest to have been delivered a mortgage rate shock with a huge hike from 2.99 per cent to 4.49 per cent, despite believing they had escaped a hike by not being sold to Nationwide.

It is the latest in a round of rises that has shocked those sat on lenders' standard variable rates and believed they would not rise independently of base rate - more homeowners will now be worried their lender could follow suit.

The 100,000 Bank of Ireland and Bristol & West borrowers who avoided being moved on to Nationwide’s subsidiary The Mortgage Works have begun to receive letters from the Irish bank telling them that their mortgage payments could go up by 50 per cent from next September.

A borrower with a £150,000 interest-only mortgage would see their monthly payments shoot up from £374 to £561. Those with a repayment mortgage for the same amount over 25 years will see a smaller £125 per month rise.

A sizeable number of borrowers could be stuck with the higher payments, and unable to remortgage due to low equity, as the lender courted small deposit mortgage borrowers during the property boom.

The shock follows Halifax’s decision to hike its standard variable rate to 3.99 per cent from 3.5 per cent for an estimated 1million customers and RBS / NatWest lifting its SVR by 0.25 per cent to 4 per cent for offset mortgage customers.

Those customers who did get sold on to the Nationwide buy-to-let arm already have the threat of an even bigger rate shock hanging over them.

The building society says it will align their standard variable rates with the 4.79 per cent one charged by The Mortgage Works, rather than the 2.5 per cent or 3.99 per cent one it charges Nationwide brand borrowers.

That would hike payments by a huge 60 per cent for interest-only borrowers and those affected are still waiting in limbo to find out when they will be hit.

Bank of Ireland has announced the massive rise in its standard variable rate will arrive in two stages. First a hike from 2.99 per cent to 3.99 per cent will arrive in June and then a further move upwards to 4.49 per cent from September.

The Bank of Ireland move affects 100,000 borrowers with residential mortgages under that name and the Bristol & West brand, but not the vast majority of buy-to-let loans, which reverted to base rate trackers rather than an SVR. It does not affect Post Office mortgage borrowers.

Source: ' ThisIsMoney '

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