Permanent TSB increases interest rates for savers up to 3%

The move follows an announcement from Bank of Ireland earlier this week, putting further pressure on AIB to update the rate offered to savers

Following nine consecutive rate hikes from the ECB - bringing its deposit rate to 3.75% as of August 2023 - Irish banks have been slow to pass these rates on customers. Photo: Sasko Lazarov/RollingNews.ie

Permanent TSB is the latest bank to increase saving and deposit rates for customers following Bank of Ireland's move earlier this week, announcing new rates of up to 3% for savers.

Coming into effect from the 26th of September, Permanent TSB has raised its rate on a 3-year fixed-term deposit from 2% to 3%, the highest rate offered across this fixed-term period.

In addition, the rate for regular savers will increase to 2.5% from 1%, with the new rate applying to both online and 21-day regular saver accounts for balances up to €50,000.

The rate on 18-month fixed-term deposit products will increase to 2.5%, up from 2%, with the rate on the 12-month fixed term increasing to 2% from 1.75%.

“Deposit customers are extremely important for our business and we’re delighted to announce this latest set of increases to ensure that our customers are rewarded with competitive deposit rate products in today’s higher interest rate environment," said Patrick Farrell, Retail Banking Director at Permanent TSB.

Mr Farrell also said the bank was pleased to offer a "market-leading" rate for a 3-year fixed term deposit product, adding, "we’ll continue to keep our rates under review to make sure our offering remains competitive.”

Earlier this week, Bank of Ireland was the first of Ireland's pillar banks to announce a 3% rate on certain products as the sector comes under increasing pressure from the Government to raise rates for savers.

Following nine consecutive rate hikes from the ECB - bringing its deposit rate to 3.75% as of August 2023 - Irish banks have been slow to pass these rates on customers.

Last month, data from Standard and Poor found that Ireland to have the lowest deposit rate gains out of the Eurozone, UK and US, with just 7% of interest rate hikes being passed on to savers.

Also last week, Minister Simon Harris called the rates on offer for savers "offensive," adding that mortgage holders have been hit by increased rate hikes, while savers have not reaped any benefits.

In the past year, Irish mortgage rates have risen by just under 50% as of July 2023, according to figures from the Central Statistics Office.

Finance Minister, Michael McGrath also said earlier this month that he hoped to see improvements in the next few weeks, adding that it was time for ECB interest rate hikes to be passed onto savers.

The move now puts additional pressure on AIB, the only remaining pillar bank to not update its saving rates for customers, with all three lenders posting bumper half year profits on the back of the ECB's aggressive interest rate campaign.

Speaking this week, Head of Communications at Bonkers.ie, Daragh Cassidy said increases were good news for savers, however he feared that rising rates could coincide with additional hikes on mortgage holders.

"I’d encourage anyone with large savings in a demand deposit account or current account to look at moving their money to a fixed-term savings account," Mr Cassidy added, "provided they don’t require access to the money in the short term of course."