Permanent TSB has confirmed that it will increase the interest rate on its standard variable rate mortgages by half a percentage point to 3.69% from Monday.
The bank had already raised its variable rate by a similar amount in July last year.
In a statement, it blamed the high cost of borrowing on the money markets.
Permanent TSB said it was currently paying a higher interest rate for deposits than it was receiving from mortgages, adding that this was not sustainable.
The bank, owned by Irish Life & Permanent, said the move would affect almost 80,000 mortgage holders, which equates to around 45% of its home mortgage customers.
Permanent TSB said the rise would add an average of €15 a month to repayments.
'We will of course work closely and sympathetically with any customer who has financial difficulties but we must face up to our own financial challenges also,' said PTSB chief executive David Guinane.
'To persist with uneconomic margins on this product at a time when the bank is losing money would be irresponsible and would result in larger problems down the line,' he said.
Yesterday in the Dáil, Minister for Finance Brian Lenihan declined to give a guarantee that mortgage interest rates in the financial institutions participating in NAMA would not increase.
