Bank of Ireland is to increase its standard variable mortgage rate by half a percentage point next month.
The bank said the rate would rise to 3.99% (4.1% APR) from 22 September.
Speaking after the bank reported losses of just over €700m on Wednesday, Bank of Ireland Chief Executive Richie Boucher had signalled increases were likely.
At the time he said the bank could not continue to absorb higher costs of borrowing money on international markets without raising its own rates.
However, he pointed out that Bank of Ireland had not passed on a recent interest rate rise by the European Central Bank to homeowners on variable mortgage rates.
Figures released by the bank this week showed that just under 5% of its homeowner mortgages are in arrears, but the bank was engaging with its struggling customers.
Mr Boucher said he expected arrears to rise further due to higher unemployment and lower incomes.
