Bank of Ireland will raise its standard variable mortgage rate by 45 basis points to 3.49% next Tuesday. It will impact around 44,000 residential mortgage customers. The bank has already been recapitalized by the state to the tune of €3.5 billion and is transferring billions of euros in loans to the National Asset Management Agency.

“These increases are unjustifiable when the underlying ECB rate has remained static. Banks are hell-bent on improving their revenue streams and are gouging ordinary families.” Finance Minister Brian Lenihan says he can’t interfere with bank rate policies.

The hikes don’t end there. Last Tuesday, mortgage lender and life insurer Irish Life & Permanent raised its standard variable mortgage interest rate by 50 basis points to 4.19%–its third hike in 12 months. Its interest rate hikes effect about 80,000 mortgage customers.

It’s not over yet. Allied Irish Banks managing director Colm Doherty said this week when he announced the bank’s first-half results–a net loss of €1.73 billion–that AIB will also likely raise its variable mortgage rate by 50 basis points. AIB also received €3.5 billion from the government and the taxpayer gets it in the kisser. Again.

“I think reluctantly we’re going to follow all the other banks in increasing interest rates,” Doherty said. He added, “The price we have to pay for deposits means we are losing money on mortgages. It’s unsustainable and if we don’t do something, we won’t be able to continue to lend to the mortgage market.” And whose fault is that?

The EBS Building Society–which also received state support–increased its standard variable interest rate by 60 basis points on August 1, the third time this year it’s hiked rates.

The government is setting up a five-year plan to help mortgage holders in trouble to agree new repayment terms with banks and building societies, a situation that can only be exacerbated by an environment with rising interest rates and a country whose unemployment that is creeping closer to 14%. It would be hard to find a worse time to hike rates.

Making the situation worse, over 85% of mortgages here are variable

The banks lent aggressively to developers during the good times. The property market went belly-up and the banks were bailed out by the state … by taxpayers like Mr. Ivers. Now the same banks are hiking interest rates when the ECB doesn’t. For many homeowners already steeped in negative equity, pay cuts and job losses, it’s the final insult.

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