Major blow for thousands of Irish mortgage holders as major bank announces shock monthly hike

A MAJOR blow is on the way for Irish mortgage holders as Permanent TSB have announced another mortgage rate hike.

The bank is to increase the cost of its fixed-rate mortgages for the third time since November.

Rates are set to be 0.75 percentage points more expensive, and will take effect from tomorrow, Wednesday, March 8.

The hefty move means many of Permanent TSB’s fixed rates for a standard first-time buyer will now be over 4.50 per cent.

The bank say the hikes announced today are in response to five rounds of interest rate increases from the European Central Bank, rising from 0 to 3 per cent, in recent months.

Permanent TSB’s first hike, announced in November 2022, was a weighted average increase of 0.45 per cent, while their second, a weighted average of 0.51 per cent, was revealed in January this year.

The three rate increases represent a cumulative rise of 1.7 percentage points.

Business loan rates are also set to increase, while variables will remain unchanged for now. 

The bank is also increasing its rates for savers – but only by up to 0.50 percentage points, with the increase on some savings products much smaller. 

Commenting on the news, Daragh Cassidy, Head of Communications at Bonkers.ie said today’s hike was to be expected.

He said: “Since last July the ECB has hiked its main lending rate from 0 per cent to 3 per cent so most of this increase was bound to be passed on eventually. 

“However, even after this latest increase from PTSB, its third since November, it’s only passed on just over half the recent ECB rate increases.

“But this ‘generosity’ has largely come at the expense of savers who are still getting some of the worst savings rates in all of Europe. 

“PTSB, along with AIB and BOI will all come under big pressure in the weeks ahead to significantly improve their savings rates.”

Looking to the future, Cassidy added that “things don’t look great” for people on trackers, variable rates or those hoping to buy in the coming months.

MORE INCREASES TO COME

He explained: “The ECB is almost guaranteed to hike rates by another 0.50 percentage points next week and by at least another 0.25 percentage points before the end of this summer.

“This will take the main lending rate to 3.75 per cent, though it looks increasingly likely that it will go even higher.

“This means yet more rate increases from all lenders are guaranteed over the coming months.”

“Up until the middle of last year, it was possible to get a mortgage rate as low as 1.90 per cent in Ireland – albeit with several caveats.

“By the end of the year, the cheapest rate is likely to be over 5 per cent, with the average rate even higher.

“The impact this will have on affordability for first-time buyers will be huge.”

A week ago, Permanent TSB has posted a jump in annual profit following its “once-in-a-generation” purchase of loans from outgoing rival Ulster Bank.

The bank said its profit before tax came in at €267 million in a “transformational” 2022, compared to a loss of €21 million in 2021.