Experts have warned costs could go up after ICS Mortgages became the first provider to increase rates.
House hunters have been advised to get a mortgage quickly amid concerns that interest rates are set to rise.
The lender has announced a rate increase on all of its fixed mortgage deals with immediate effect. The rises in rates are a result of the increased cost of funding from the capital markets on which ICS is reliant to fund its lending.
Martina Hennessy, head of mortgage advisers Doddl.ie, said: "After experiencing mortgage rate decreases for a number of years, the uplift by ICS Mortgages is a reminder that we are in a low-rate environment, with mortgage rates the lowest they've been for over 12 years."
The move by ICS to break ranks on rates could spark other lenders to follow suit.
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Ms Hennessy explained: "Upward pressure on funding costs could result in other lenders also increasing rates in the not too distant future.
"These rate increases, while unwelcome, are reflective of volatility in global capital markets on which ICS, as a non-bank lender, is reliant for funding. The current low-rate environment, plus rising home values, present an opportunity for mortgage-holders to lock in lower rates and safeguard against the rising cost of living."
She also said that "98% of Doddl.ie clients are fixing their mortgage, with fixed rates currently lower than variable ones", adding: "Purchasers value the security over repayments that fixed rates provide, and switchers tend to have a strong loan-to-value, so can lock in some of the really low fixed rates on market, which start at 1.95%."
David Hall of the Irish Mortgage Holders Organisation, which campaigns for fair rates, advised people to "get a mortgage quick".
But acknowledging the scarcity of supply, Mr Hall added: "They also have to get a house. That's the problem unfortunately. Mortgages don't transfer - they're assigned to a property and people can't find properties, so it's an absolute disaster.
"The problem at the moment is it is uncertain when rates will go up. People expect it to happen but no one knows if it will definitely happen."
He said the general feeling was that inflationary pressure would suggest a rate rise, but the political pressure from the war in Ukraine meant the European Central Bank (ECB) was holding back.
"The whole of this is less than ideal, but the bottom line is make sure you get proper advice and don't jump into something," he said. "This is uncharted waters where there is a live war.
"It's bad enough trying to buy a house in a housing war without getting involved in a real war."
He believes the ECB will hold off on a rate rise, but said that if inflation becomes embedded, it will cause economic problems "big time".
Mr Hall added: "There's no good news in this, that's the reality. There is simply no good news. So I think tread with caution and make sure you can pay as well if interest rates go up."
The ECB base rate is currently 0% after it cut rates following the financial crash more than a decade ago.
Ms Hennessy said ICS remains competitive even after the rate increases.
"ICS still remains competitive relative to some of the pillar banks, with three-year fixed rates ranging from 2.25% to 2.55% and five-year fixed 2.4% to 2.69%. The pillar banks offer these rates at up to 3%," she explained.
She said the average first-time buyer's mortgage drawn down in the past three months was €247,790, so the increase from ICS would result in a €26-per-month rise in mortgage repayments.
The difference between the highest and lowest rate on the market now stands at 2.55 points, which represents a potential saving of €135 a month for every €100,000 repaid over a 25-year term.
Doddl says it is important to note, when choosing a mortgage rate, that the rate you are eligible for is the rate on the date of drawdown.
However, ICS, which specialises in mortgages for public sector workers, has noted its lower pre-increase rates are still valid on all loan offers.
