The Tanaiste has rejected opposition calls on the government to intervene to prevent AIB and EBS from increasing their standard variable mortgage interest rates.

Eamon Gilmore said that while the rate hikes were bad news for mortgage holders the decision was take for commercial reasons.

The Fianna Fail leader Micheal Martin said the hike would cost home-owners with a loan of 300-thousand euro, more than 800-euro a year.

And he warned that the increase would add to the numbers of people already in mortgage arrears.

But the Tanaiste rejected calls on the government to intervene:

Both banks say previous rate were too low

Variable rate customers at AIB will see their rate increase by 0.4% from June while those with variable rate homeloans from EBS and Haven will have to pay an extra 0.25%.

EBS says the decision to raise variable rates "is driven by the need to ensure the bank is lending at long term sustainable pricing levels.

The bank says its variable rates have been at unsustainable levels relative to the cost of funding for several years, while EBS has not announced an increase in almost 2 years.

AIB says it had the lowest standard variable rate in the market, but now had move more in line with market competitors.

The Fianna Fail leader,  Micheal Martin, has hit out at the government saying the hike would cost home-owners with a loan of €300,000, more than €800 a year.

And he warned that the increase would add to the numbers of people already in mortgage arrears.