Permanent TSB has announced a series of increases to its mortgage rates that will kick in at the end of next month.
The move comes after the European Central Bank (ECB) last week raised interest rates by a further quarter of a percentage point as part of moves by the regulator to bring inflation under control.
The move piled additional financial strain on mortgage holders, particularly the State’s 250,000 tracker customers who were hit with an automatic increase.
The hike lifted the ECB’s main refinancing rate, the one that affects mortgages, from 3.75 per cent to 4 per cent – its highest level in more than 20 years. It was the eighth hike since last July.
Higher inheritance tax threshold will not apply just because you have yet to get inheritance
Taking voluntary redundancy or getting laid off? You need to know about your tax, welfare and pension options
Can knowing tomorrow’s news make you rich? That’s not a foregone conclusion
Pensions: Uncertain times ahead of retiring workers
PTSB said on Tuesday it would raise its mortgage variable rates 0.05-0.4 per cent in response to the move. The variable rates are linked to each customer’s loan-to-value. Following these increases, the managed variable rates on home loans will range from 3.8 per cent to 4.3 per cent.
The bank’s home loan fixed rates for new business range from 3.9 per cent to 4.9 per cent, depending on the fixed rate term and the customer’s loan-to-value. Its standard variable rate for home loans will increase by 0.35 per cent to 4.3 per cent.
[ Philip Lane plays down September rate hike talk, laying bare ECB divideOpens in new window ]
There are no changes to the bank’s home loan fixed rates for new or existing customers, which account for about 95 per cent of the its new business, with about 5 per cent seeking a variable rate.
PTSB is also increasing variable and fixed rates for buy-to-let mortgage customers and ending fee waivers on legacy current accounts that are no longer available to new customers.
The home loan and buy-to-let mortgage rate changes take effect from July 31st.
The ECB’s latest rate increase came with a warning that its unprecedented ramping up of interest rates is not over yet and that headline inflation across the euro zone is now likely to stay above its 2 per cent target rate until at least the end of 2025.
In the aftermath of the ECB rate hike, Taoiseach Leo Varadkar poured cold water on suggestions of tax relief on mortgages.
He said higher mortgage interest rates are “normal” while the reintroduction of tax relief was described as “complicated”.
His comments have dampened expectations of significant supports in Budget 2024 for mortgage holders.
Mr Varadkar acknowledged that “for some people, particularly on tracker mortgages, [the rate hike] means hundreds of extra euros on mortgage payments every month and that’s really biting a lot of people and I understand that”.
He added: “It is important to say that the ECB is independent in its decisions. It is increasing interest rates for a reason, which is to bring inflation under control and to restore price stability, and if that can be achieved it benefits everyone.”
