Bank of Ireland is writing to 13,500 buy-to-let and residential customers on tracker mortgages to warn them of plans to more than double the base rate differential it charges.
Around 7 per cent of Bank of Ireland UK mortgage customers will be affected by the changes to the interest rate differential, over 50 per cent of which are buy-to-let borrowers.
For buy-to-let, the rate will jump from Bank of England base rate plus 1.75 per cent to base rate plus 4.49 per cent from 1 May.
For residential borrowers, the increase will be applied in two separate stages. From 1 May, it will rise from base plus 1.75 per cent to base plus 2.49 per cent. From 1 October, it will then be subject to yet another increase, taking it to base plus 3.99 per cent.
A statement from the bank argues the increases reflect higher funding costs.
It says: “This change reflects the significant increase in the cost of funding these mortgages since 2008 and the need for banks to maintain greater levels of capital.”
Coreco communications director Andrew Montlake says: “This is a shocking move by Bank of Ireland. It shows a blatant disregard for the fortunes of its customers. One of our clients has been hit by a sudden rise of 2.74 per cent on a rental property which increases his payments by £776 a month.
“It is all very well offering to waive redemption penalties for those who can move but, for those who cannot, it create unnecessary issues and will surely breach boundaries of TCF.”
The rate increase does not affect Post Office customers.