Bank of Ireland announces changes to interest rates

Bank of Ireland today (Friday, 12 August 2011) announces a number of changes to interest rates.

CONSUMER BANKING PRODUCTS

Mortgages:

Standard Variable rates will increase by 0.5% on 22 September 2011 for existing customers on these products.  The new Standard Variable Rates will be 3.99% (4.1% APR) for Bank of Ireland and 4.14% (4.2% APR) for ICS Building Society.  Variable LTV rates for Owner Occupier and Buy to Let customers will increase by 0.5%.  These rates will take effect for existing customers on these products from 22 September 2011 and for new customers from 15 August 2011 (see note 1).  These changes follow increases in the ECB rate in April and, more recently, in July.  This change will mean an average increase in the monthly repayment for a Bank of Ireland owner occupier customer of €19.

Personal Credit cards

Purchase interest rates will increase by 0.5% APR on the existing suite of personal credit cards with effect from 17 October 2011.  This increase will not be applied to Student and Affinity credit cards.

There will be no change to introductory or Cash Advance APR’s on Bank of Ireland Personal Credit Cards (see note 2).

Personal Loans

Interest rates for personal variable rate loan products will increase by 0.25% gross with effect from 25 August 2011.  This increase will not be applied to Student and Graduate loan accounts.

Personal Overdrafts

Interest rates applied to personal overdraft balances will increase by 0.5% gross with effect from 25 August 2011.  This increase will not be applied to Student and Graduate overdrafts.

Personal Current Accounts

The credit interest feature is being withdrawn from 21 November 2011.  Existing registered customers can earn credit interest up to the end of the current interest quarter on the weekend of 19 November 2011.  The final credit interest posting will be on 21 November 2011.

BUSINESS BANKING PRODUCTS

Business Loans

Interest rates applied to variable business loan products will increase by 0.5% with effect from 25 August 2011 (see note 3).  All other variable rate business loans for existing customers will also increase by 0.5% with effect from 25 August 2011.

Business Overdrafts

In a comment on these changes the Bank said: “This has been a difficult decision and one we have considered very carefully.  It is over 12 months since we last increased variable rates for any of these products and we have delayed passing on both the April and July ECB rate increases up to this point.  However, the price at which we provide lending facilities must reflect the cost of funding those facilities and we have no option other than to increase our rates to reflect the two ECB rate increases.

“The Bank continues to offer very competitive rates across our full range of lending products in Ireland and this is reflected in the demand from our customers.  For example, the most recent Irish Mortgage Council market share data shows that we provided mortgage finance for 46%* of all First Time Buyer customers.

Bank of Ireland has no lending capacity constraints regarding the provision of SME, Consumer and Corporate lending in Ireland, subject to demand and viability”.

* Source: IMC Q1 2011 data

ENDS

APPENDIX – Selected rate matrices

CONSUMER BANKING PRODUCTS

Note 1:

Bank of Ireland Mortgage Bank is a member of Bank of Ireland Group.  Bank of Ireland and Bank of Ireland Mortgage Bank, trading as Bank of Ireland Mortgages, are regulated by the Central Bank of Ireland.  ICS Building Society is a member of the Bank of Ireland Group.  Bank of Ireland and ICS Building Society are regulated by the Central Bank of Ireland.

NOTE 2:

Under the EU Consumer Credit Regulation, which came into force in Ireland on 11^th June 2010, the APR (Annual Percentage Rate of charge) for credit cards must include all costs to the cardholder – including the government stamp duty on credit cards which currently stands at €30 per credit card account per year.  This resulted in APRs increasing by between c. 2% and 3% at that time although the customer does not pay any extra on their account.

Credit Cards

Personal Credit Cards

The following rates are effective as and from Monday, 17 October 2011.

Card                                       New APR Rate

Clear                                       13.8%                        

Classic                                    17.9%                        

Platinum                                 16.6%                        

Twin                                       22.8%                        

Standard                                21.6%                        

Gold                                        19.3%

• APR- Annual Percentage Rate: the APR (Annual Percentage Rate of charge) for credit cards must include all costs to the cardholder – including annual fees and the Government stamp duty on credit cards which currently stands at €30 per credit card account per year.

BUSINESS BANKING PRODUCTS

Note 3:

The following lending rates are effective as and from Thursday, 25 August 2011.

Lending Interest Rates

Small Business Loan                    Rate %

€100,000 – €300,000                  5.24

€50,000 – €100,000                     5.74

Up to €50,000                               6.74

Developing Business Fund             5.49

Business Support Fund                   5.75

Green Business Loan                       5.49

Practice Development Loan           5.24

AA Overdraft                                      8.05

AA Term Loans and Loans              7.20

Charity Overdraft Rate                  3.65

Charity Loan Rate                          4.40*

* No longer available for new facilities

All other variable rate business loans for existing customers will also increase by 0.5% from 25 August 2011.