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The bank said the new fixed rates are effective immediately and apply to customers who draw down new mortgages from the Bank. However, new customers who already have a written quote from the Bank for a lower fixed rate, and who draw down a new mortgage by 9 December 2022, can avail of the lower rate up to that date.
Bank of Ireland’s variable and tracker rates are not affected by this change. It means house hunters applying for a mortgage will face increased repayments compared to those on older rates.
It is estimated that for every €100,000 borrowed, mortgage holders, are likely to see repayments increase by €25 per month for every 0.5% rate increase. It means a new Bank of Ireland customer borrowing €300,000 could pay up to €40 per month more in monthly repayments than existing fixed-rate customers.
Bank of Ireland’s decision follows a similar move by AIB last month which made a 0.5% increase on its fixed-rate products in the wake of a series of rate hikes by the European Central Bank (ECB).
Permanent TSB remains the only major Irish lender that has yet to pass on any of the ECB rate hikes.
Irish lenders have been slow to pass on the increases in comparison to other European countries. However, mortgage interest rates here are still amongst the highest in Europe.
Today’s announcement comes as Bank of Ireland recorded higher net interest income due to rising rates.
In a trading update this week, the bank said it expects net interest income to increase between 6% and 7% this year, compared to 2021.
The ECB have raised interest rates three times already this year with more planned before the end of 2022 and in the first months of 2023.
Many economists expect rates to peak at around 3% by summer next year.
Bank of Ireland’s net interest income was 3% higher in the nine months to September 2022 when compared to the same period in 2021.
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