Bank of Ireland has announced it is increasing interest rates on its fixed-rate mortgages for the second time in less than three months following several hikes by the European Central Bank.

The bank, which last month forecast an increase of third in net interest income for the 2022 financial year as a result of the ECB decisions, will increase fixed rates on new mortgages by 0.75% following November's 0.25% bump.

Fixed rates for existing mortgage customers, including customers who are coming to the end of their fixed-rate period and seeking to re-fix their mortgages, as well as tracker or variable rate customers seeking to move to a fixed rate will rise 0.5%.

Variable rates and tracker rates will remain unchanged, and applicants who already have credit approval and who draw down their mortgage by 21 February, can still avail of the previous fixed rates.

The ECB is expected to further increase interest rates in the coming months as part of sustained efforts to curb inflation after raising its main lending rate from 0% to 2.5% in the second half of 2022.

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Bank of Ireland has also announced a 0.5% increase for Regular Save personal deposit accounts, allowing customers to earn 0.75% on Mortgage Saver, Goal Saver and Child Save accounts, capped at up to €15,000.

The bank is also launching a new one-year term deposit account for personal customers at 0.5%, capped at €100,000.

The fixed rates on new mortgages are effective from today (24 January), while deposit rate changes will take effect this Friday (27 January).

The three remaining retail banks (AIB, Bank of Ireland and Permanent TSB) all increased their fixed rates in the wake of the ECB's decisions. The average interest rate for new mortgages in Ireland was unchanged at 2.57% in November though.

(Pic: Leah Farrell / RollingNews.ie)