Permanent TSB hikes fixed-rate mortgages by 0.75% as lenders play catch up    

Follows five rounds of interest rate increases from the European Central Bank, totalling 3%

The bank said that it was also increasing deposit interest rates by between 0.20% and 0.35%.        

Permanent TSB has hiked its fixed-rate mortgages across all maturity periods by 0.75%, or three-quarters of a point, in a further sign that Irish lenders are playing catch up with official interest rate increases already announced by the European Central Bank. 

The interest rate increases come as the ECB prepares to increase its official interest rates further when it meets next week, and amid concerns the central bank will continue to hike borrowing costs at subsequent meetings as it fights stubbornly high levels of inflation. 

"The changes announced today follow five rounds of interest rate increases from the European Central Bank, totalling 3%, in recent months," Permanent TSB said.

The bank said that its fixed-rate increases will for the time being only apply to new customers, while borrowers holding offers for home loans will be able to tap existing fixed rates until June 2. 

It said that it was also increasing deposit interest rates by between 0.20% and 0.35%.        

Michael Dowling, a leading mortgage broker, said that Permanent TSB for the time being has become the most expensive of the main banks for fixed-rate mortgages, but that other lenders will likely also increase their rates.  

He said the increase will also affect some of the Ulster Bank customers that Permanent TSB has acquired when they too come off their fixed rates. "It reflects what is happening in the market. I expect other banks to follow," Mr Dowling said. 

On deposit rates, the gap between the rates charged by Irish banks for their mortgages and the rates they offer depositors remains wide, which means further "good news for shareholders but not customers", Mr Dowling said. 

Permanent TSB said it was its third increase for fixed-rate mortgage customers since the European Central Bank started to increase its rates last year.