Finance Ireland hikes interest rates on fixed mortgages

Borrowers who have received loan offers have until April 17th to close on current rates

Finance Ireland has become the latest home loan provider to increase the interest rate on its fixed mortgage products in response to rising European Central Bank (ECB) policy rates.

From Thursday, March 16th, the nonbank lender will hike the interest rate across all of its three-year fixed mortgage products by 0.75 per cent while the rate on its five-year fixed mortgage products will increase by 0.5 per cent, it said on Monday.

The company, which has a 5 per cent share of the mortgage market here, said that all borrowers who had received a loan offer by the effective date would have until close of business to lock in their mortgage at current rates.

Finance Ireland said customers were advised to contact the lender or their broker if they thought they might qualify for a different product or a different rate on their mortgage.


Last month, the lender announced it would be increasing its variable mortgage rates by 1 per cent, also effective from March 16th, following hikes of 1.5-2 per cent last October.

AIB, Bank of Ireland and Permanent TSB have all increased their fixed mortgage rates in recent times, while Ulster Bank, which is exiting the market, increased its fixed rates by 0.4-0.9 per cent late last month. Nonbank lender Pepper Finance, meanwhile, decided to pass on the full cost of the ECB’s most recent rate hike to customers, with some borrowers set to face an interest rate of as much as 8 per cent.

The ECB is expected to opt for another half-point bump in rates when its governing council meets on Thursday. This will bring its main refinancing rate, the one that affects mortgages, to 3.5 per cent from 3 per cent and up from zero per cent last July.

Some analysts had expected the ECB’s rates to rise as high as 4 per cent this summer, which will be passed on to Irish borrowers in the form of higher retail rates. The outlook has been significantly clouded in recent days following the collapse of three US lenders, Silvergate, Silicon Valley Bank and Signature Bank, however.

Bloomberg reported on Monday that traders were pushing back against the ECB’s own guidance, betting that it could deliver the smallest rate hike this cycle when it meets on Thursday.

ECB president Christine Lagarde signalled a half-point hike was highly likely at the last monetary policy meeting in February, and the market has treated it as a near certainty ever since.

But plans for bigger hikes may face stiff opposition from dovish ECB policymakers, who are likely to argue that more caution is warranted amid a fresh wave of uncertainty.

Ian Curran

Ian Curran

Ian Curran is a Business reporter with The Irish Times