Ireland mortgage interest rates: Homeowners hit by rate hike as permanent TSB raises interest on fixed rate mortgages

Permanent TSB is the latest lender to raise mortgage costs in response to soaring European interest rates.

he lender increases its fixed rates by 0.45 percentage point on average, the Irish Independent has learned.

The higher rates will add around €60 per month to the repayments of a typical new fixed rate mortgage of €250,000.

It is understood that the bank will give those with mortgage approval 90 days to withdraw the prevailing rates before this latest increase, or until February 15. This will apply to first time buyers and changers.

Some PTSB savings rates are also increasing, it is understood. This contrasts with other banks that have resisted raising deposit rates despite three strong hikes by the European Central Bank (ECB).

Permanent TSB’s variable mortgage rates are not increasing, the lender announced this morning.

Permanent TSB’s variable rate is already lower than some other lenders.

This means that 56,000 mortgage holders whose loans have been transferred from Ulster Bank to Permanent TSB should benefit from Permanent TSB’s lower variable rate.

Ulster Bank’s floating rate is 4.3pc, but the permanent TSB has a rate of 3.95pc. This represents a savings amount of more than €200 per year on each tranche of €100,000 borrowed.

Last week, the Bank of Ireland increased interest on its fixed-rate mortgages by 0.25 percentage points for new customers. And AIB recently increased its fixed rates by 0.5 percentage points.

This is half of the fixed rate hike announced by its rival AIB.

New Bank of Ireland rates came into effect last week for new borrowers and money changers.

This means that the bank’s interest rate of 1.9pc for those who borrow more than €400,000, without cash back, will drop from 1.9pc to 2.15pc for new borrowers and moneychangers.

But the new tariffs will not impact existing BoI customers who are coming to the end of a fixed tariff. They will still be able to lock in the rates that were in place before the last hike.

There is no increase in variable rates.

Banks here have weathered the full impact of a series of recent ECB rate hikes.

The Frankfurt-based central bank has pushed its refinancing rate from 0% to 2% in three major hikes since the summer, with another
big increase expected next month.

However, tracker customers of all lenders automatically face higher interest rates, in line with three record hikes announced by the European Central Bank in the past four months.

Bonkers.ie’s Daragh Cassidy said the ECB is almost certain to raise rates by 0.5 percentage points at its next meeting on December 15 and again in the new year.

“So it’s likely that we’ll see further rate increases from Permanent TSB and all other lenders over the next few months, unfortunately.”

Non-bank lender ICS has already announced several rate hikes and heavily restricted new lending.

Finance Ireland announced steep rate increases and suspended long-term rates of 10 years or more just a year after they were introduced. Before Money also increased its rates.

The ECB is now paying 1.5% for bank funds deposited with it, prompting calculations that the three major banks here are poised to kill €1bn on deposits and lending spreads as the ECB raises interest rates.

Leslie M. Gill