PTSB raises fixed mortgage and deposit rates

Permanent TSB (PTSB) said on Tuesday it is raising its fixed-term mortgage rates for new business by three-quarters of a percentage point, marking the third increase since the European Central Bank (ECB) started a cycle of hiking official borrowing costs last July.

The decision will, for example, increase the rate on PTSB’s three-year fixed mortgages on a property where the loan-to-value ratio is 60-80 per cent to 4.35 per cent.

PTSB, led by chief executive Eamonn Crowley, increase follows on from the bank added a weighted average 0.45 per cent to fixed rates in November, followed by another weighted average hike of 0.51 per cent in January.

The ECB has increased its main refinancing rate from zero to 3 per cent since July and is widely expected to add a further 0.5 of a point to official rates when its governing council meets next week.

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Meanwhile, PTSB has increased certain deposit rates, with holders of on-demand regular savings accounts set to see the annual rate they receive for amounts of up to €50,000 rise to 0.75 per cent from 0.35 per cent.

The new mortgage rates take effect from Wednesday, though customers who have already received an offer letter will have until Friday 2nd June to complete the drawdown of their loan at pre-existing rates. The new deposit rates will kick in from next Tuesday.

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Irish banks have lagged peers in most European countries in passing on ECB rate increases so far. This is mainly because they have benefited disproportionately from increases in ECB deposit rates, as Irish lenders are storing of billions of euros of excess customer deposits with the central bank.

PTSB said last week it now sees shareholders’ return on equity – a key measure of profitability – rising to 13 per cent medium term, compared to a previous target of 12 per cent and a result of 0.6 per cent for last year.

AIB and Bank of Ireland have also hiked their return on equity targets recently, driving by the benefits of rising rates.