Move comes less than a week after European Central Bank hiked its rates
Non-bank lender ICS Mortgages have increased its fixed and variable rates.
It is the fifth time this year that it has increased the cost of borrowing from it.
It is increasing new home-loan fixed rates by between 0.45 of a percentage point and 0.5 points, for those taking out a new fixed rate, effective from this Thursday.
The variable rates are going up by 0.25 of a percentage point, effective from the start of November.
The latest hikes come just two months after ICS Mortgages’ parent, Dilosk, said it has agreed to sell itself to Pepper Advantage, the loan services provider used by investment firms and banks. The sale price was not disclosed.
Broker Michael Dowling of Irish Mortgage Brokers said the latest ICS fixed rate increases will add €78 a month to repayments on a mortgage of €300,000.
The latest variable rate increase will add €39 a month to repayments on a similarly-sized mortgage amount.
Mr Dowling said: “ICS variable rates are 1.35 percentage points higher than the cheapest on the market and their fixed rates are 2.8 points higher than the cheapest rates on the market.”
The latest move will see some rates go as high as 5.95pc.
Its rival Núa Money has had two rises this year.
The latest ICS Mortgage comes a week after the European Central Bank raised its rates for a second time this year, with some experts expecting another increase before the new year.
Mainstream lenders, such as AIB, Bank of Ireland, PTSB and Avant Money/Bankinter, have so far not increased their mortgage rates this year.
Non-bank lenders such as Núa Money and ICS Mortgages have to rely on expensive wholesale market funding, unlike banks, which have access to household deposits to fund their lending.
This means funding for non-bank lenders is more expensive.
Mr Dowling said that a couple who took out a three-year fixed rate at the start of this year would have being able to get a rate of 4.1pc from ICS, assuming a 90pc loan to value and a 35-year term.
From September 17, the rate goes to 5.9pc.
This means that payments for this mortgage will go from €1,346 a month at the start of this year to €1,690 a month, Mr Dowling said.
That is a rise of €344 in monthly repayment for a couple taking out a next fixed rate now compared with that they would have paid in early January.
Asked why it was imposing so many increases in lending rates, ICS said: “The changes reflect the recent ECB rate increase and broader funding market conditions where we access funds for mortgage products.
“We are providing advance notice to impacted customers and will continue to actively monitor market conditions and review our interest rates on an ongoing basis.”
ICS said customers with fixed-rate loan offers currently in the pipeline must draw down their loan by November 1, to avail of the fixed interest rate contained in their loan offer.
All customers with fixed-rate loan offers in the pipeline will receive written notification advising them of the drawdown deadline, with the revised interest rate and that will apply where drawdown takes place after November 1, it said.