Bank of Ireland to impose second mortgage rate rise but deposit rates up too

Fixed rates for new customers are to go up by 0.75 percentage points immediately.

That move will add €125 to monthly repayments for a first-time buyer getting a €300,000 mortgage.

For existing customers of the bank coming to the end of a fixed rate, the rise is 0.5 percentage points.

This includes customers who are coming to the end of their fixed-rate period and are seeking to re-fix their mortgage, and tracker rate or variable rate customers who wish to move to a fixed rate.

Variable rates are unchanged, and tracker rates move in line with the European Central Bank rate.

The bank last increased its fixed rates in November when they went up by 0.25 percentage points.

Applicants who already have credit approval and who draw down the mortgage by February 21 can still avail of the previous fixed rates, the bank said.

In a move that will be welcomed by savers, Bank of Ireland is also increasing its deposit rates.

The rate on its Regular Saver personal deposit account will go up by 0.5 percentage points, allowing customers to earn 0.75pc on Mortgage Saver, Goal Saver and Child Saver accounts, capped at up to €15,000.

The bank is launching a new one-year term deposit account for personal customers at 0.50pc, which is capped at €100,000.

The fixed rates on new mortgages are effective immediately, while deposit rate changes will take effect this Friday.

It comes after big shareholders in Bank of Ireland have begun questioning the bank’s “uneconomic” mortgage pricing after all its main rivals put up rates in the last two months.

AIB, Permanent TSB and Avant have all recently increased the interest they charge on fixed-rate loans in response to a series of aggressive rate rises from the European Central Bank.

Bank of Ireland, which is led by Myles O’Grady, said it was increasing rates after the cumulative increases of 2.5 percentage points in European Central Bank rates since July 2022.

Earlier this month, Permanent TSB raised its mortgage rates for the second time in two months.

The lender pushed up its fixed rates by an average of 0.51 percentage points in response to four rate rises by the European Central Bank (ECB).

The latest increases will add €120 to the monthly costs of a typical first-time-buyer mortgage.

The ECB is expected to increase its key lending rates by another 0.5 percentage points next week.

Broker Michael Dowling said the increase of 0.75pc was not unexpected, and brings Bank of Ireland’s rates in line with their competitors.

The High Value Rates (mortgages over € 250,000) and the “green” mortgage are still the cheapest available rates, he said.

On a mortgage of € 300,000, the 0.75pc increase will add €125 per month to repayments.