ICS announces sharp jump in variable mortgage interest rates

ICS has decided to increase its variable mortgage rates in response to rising borrowing costs generally.

The lender, which is owned by non-bank financial group Dilosk and commands about 5 per cent of the Irish mortgage market, said it would increase variable interest rates by between 0.5 per cent and 1.25 per cent across owner-occupier and buy-to-let products from October 1st.

The move is expected to be followed by other mortgage providers, heaping further financial pressure on households here. So far most of the main lenders have not changed their variable rates in response to the European Central Bank’s (ECB) half-point hike in July. Frankfurt is expected to opt for a further half-point increase next month as it battles to tame record inflation across the bloc.

ICS said owner-occupier rates would increase across all loan-to-value (LTV) bands by 1.25 percentage points. This would, for example, lift the rate on an owner-occupier variable rate mortgage with an LTV of less than 70 per cent from 2.45 per cent to 3.7 per cent.

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Buy-to-let variable rates will increase across LTV bands by half a percentage point, it said, rising from 3.75 per cent to 4.25 per cent in the case of LTVs of less than 60 per cent.

This is the second tightening of mortgage lending by ICS since the ECB started raising interest rates.

Earlier this month it capped the size of new home loans it was prepared to approve at just 2½ times a borrower’s income, as well as introducing more onerous loan-to-value restrictions for both first-time buyers and those trading up. It also lowered the maximum loan size it was prepared to consider and set minimum income limits for applicants — €50,000 for a single person and €100,000 for a couple.

“Lenders continue to experience significant increases in the cost of funding resulting from ongoing volatility in the international capital markets. Like all prudent mortgage lenders, ICS Mortgages must ensure that our mortgage products are funded in a stable manner, which takes account of the evolving interest rate environment,” Ray McMahon, ICS’s chief commercial officer, said.

“ICS Mortgages remains committed to offering competitive mortgage interest rates. With these rate changes, we continue to offer attractive variable rates for both owner-occupier and buy-to-let mortgage holders. We will continue to review our position on variable interest rates on an ongoing basis. Our fixed rates remain unchanged.

“All existing variable rate customers will be contacted to outline the effect of these changes on their ICS Mortgages product.”