The company said the increase was needed because of the ongoing increased cost of funds to EBS from retail, corporate and wholesale markets.
Meanwhile, in a further blow to struggling homeowners, Permanent TSB has introduced a large hike in fixed mortgage rates for existing customers coming off fixed rates.
Effective from yesterday, the bank has increased its two-year fixed rate term from 5.25% to 7.25% with the five-year fixed rate jumping from 5.75% to 8.75%.
The bank’s 10-year fixed rate has increased from 6.1% to 9.1%.
Permanent TSB has said all fixed rates will remain under review as the cost to the bank of borrowing money continues to fluctuate.
The new increase is aimed at the bank’s existing customers who are coming off fixed rates or discounts. These customers are automatically given a 20-day options letter when their fixed-rate period end.
A spokesperson for Permanent TSB declined to give the exact amount of customers due to come off fixed rates or discounts but said it was “a relatively small portion”.
In practice, the hike means a fixed rate borrower on a €250,000 mortgage, and continuing on the new five-year fixed rate, will fork out an extra €500 per month.
The bank has said the rate increases for those customers coming off fixed or discounted rates would only be available “for a limited time” and that all fixed rates will remain under review as the cost of funds fluctuates.
Industry insiders believe the bank’s new fixed rates, due to be rolled out in the coming weeks, will be close to the figures announced on Thursday night.
Permanent TSB previously denied reports it was planning to exit the fixed rate market completely.
The Professional Insurance Brokers Association (PIBA) yesterday slammed the hikes as “appalling”. Its director Rachel Doyle said the hikes would place further strain on already struggling homeowners.
“These increases are absolutely appalling to say the least. This is going to be a major burden for people already struggling and who have attempted to get some stability by fixing their rates.”
Ms Doyle said the increases would essentially force Permanent TSB customers into accepting variable rates.