PERMANENT TSB IS increasing interest rates including fixed-term mortgage rates and deposit rates.

The bank will raise interest rates across its home loan fixed-rate products by a weighted average of 0.45%.

The increases will range from 0.05% to 0.9% depending on the length of the fixed term, the size of the loan and the size of the loan relative to the value of the property in question.

The increases are in response to interest rate increases from the European Central Bank in recent months.

There are no changes for customers on existing fixed rates and there are no changes to the bank’s variable rates for new or existing customers.

AIB and Bank of Ireland recently also increased their rates.

Customers who have received an offer letter from Permanent TSB will have 90 days (until 15 February 2023) to complete the drawdown of their loans at existing rates or prior to their current loan offer expiration, whichever date is the earliest.

Customers on a Standard Variable Rate who transferred to Permanent TSB earlier this month from Ulster Bank are benefitting from Permanent TSB’s lower SVR rate with a .35% reduction in their previous Ulster Bank SVR rate, a spokesperson noted today.

The bank has also confirmed that existing customers can access the same fixed rates as new customers with the exception of one introductory offer.

Increase on interest on deposits

The bank also announced that it will raise interest rates payable on certain deposits from 0.2% (Regular Saver Online/21-day Regular Saver) to 1.15% (five-year fixed term).

Commenting on the increases, Patrick Farrell, Retail Banking Director at Permanent TSB, said: “For any customer applying for a mortgage over €250,000 the increases range from 0.05% to a maximum of 0.45%.

“We are seeking to balance the reality of the increased interest rate environment with the need to provide a competitive offering to our mortgage customers and to provide certainty, in particular, to those customers who are already advanced on their mortgage journey.

“We also recognise the need to re-commence increasing deposit rates for savers and we are pleased to start this today by introducing increases to our Regular Saver and Fixed Term deposit accounts.”

First-time buyers

Meanwhile, a new report from Banking & Payments Federation Ireland (BPFI) has highlighted the increased mortgage repayments homeowners are facing in the last two years.

The median monthly mortgage repayment (excluding self-builds) rose by more than €110 to €1,020 for First-Time Buyers (FTBs) between H1 2020 and H1 2022 (the first half of a calendar year), according to the report.

This figure increased by more than €150 to €1,361 for mover purchasers over the same period, reflecting higher house prices and larger loans.

The latest Mortgage Market Profile Report H1 2022 examines the profile of borrowers, their loans and property types on a national and regional basis.

The report also analyses how the market for home mortgages has changed since before the Covid-19 pandemic, and the previous lending peak of 2005 and drawdown peak of 2008.

Key findings from the report show:

• First-time buyers (FTBs) buying existing properties accounted for almost half (48%) of home mortgages (mortgages for borrowers buying or building homes) in H1 2022
• The median property value, loan value and monthly repayment (excluding self-builds) for FTB mortgages on existing properties each rose by about 10% between H1 2021 and H1 2022
• One in five FTBs and two in five mover purchasers borrowed less than they could under CBI mortgage rules
• The median age of the main mover purchase borrowers increased to 43 while the median FTB age was unchanged at 34
• On a regional basis Wicklow had the country’s highest median basic household incomes, monthly repayments (excluding self-builds) and property values for FTBs buying or building new properties

Overall, the mortgage market continued to grow strongly in H1 2022 with drawdown volumes up by 17% year on year to 21,895, the most since 2009. First-time buyers led the way with 11,178 drawdowns, the highest H1 volumes since 2007.

Some borrowers are minimising repayments through longer loan terms while others are opting to maximise deposits to minimise the amount borrowed.

Commenting on the report, Brian Hayes, Chief Executive of BPFI, said: “In the face of rising residential property prices and wider increases in the cost of living in the first half of 2022 and higher European Central Bank interest rates in the second half, there is understandably an intense focus on mortgage repayments at present.

“Prospective borrowers aiming to buy a home have options to minimise their regular repayments.”

Hayes noted that today’s report includes mortgages drawn down before the ECB began increasing its interest rates.

“One way to reduce payments is to look for longer loan terms, particularly for FTBs as they are much younger than movers.

“Interestingly however, there is no evidence of this as latest data which show that the share of FTB mortgages with loan terms of 35 years in H1 2022 was 26% and this share has been stable between 22% and 28% since 2015,” Hayes stated.