Finance Ireland hikes interest rates above 6pc for key fixed mortgages

The changes will push the interest on a three-year fixed rate mortgage with a 90pc loan to value to 6.6pc and a five year fixed rate at the same loan to value to 6.45pc.

Finance Ireland ,  led by former Permanent TSB chief executive Billy Kane, is the country's biggest non-bank lender including car finance and loans to the commercial real estate, farming and small business sectors.

When the new rates kick in even homeowners only borrowing 50pc of the value of the property will see three-year fixed rates of 6.3pc – double what many borrowers were been able to lock in just months ago.

Finance Ireland said the new rates apply from Thursday, March 16th.

Cases at loan offer on the effective date will have until close of business on Monday April 17th to close on current fixed rates. Cases at a pre-offer stage will have the new rates applied at loan offer.

Finance Ireland entered the mortgage market in 2019 and has built-up a substantial loan book with new lending of €552m in 2021.

However, along with other non banks it has been hit harder than traditional banks since the European Central Bank (ECB) began sharply raising interest rates last summer. That’s because non banks raise the funds they need for new lending on financial markets, where prices change fast, while banks rely on savings that they are slower to reprice.

Banks have raised borrowing costs, but by less than non-banks.

Last year Finance Ireland cut jobs in its residential mortgages section as it and other so-called ‘non-banks’ are being squeezed by the rising cost of funds they borrow on the financial markets to lend to consumers.