Bank of Ireland and ICS Building Society have confirmed an increase of 0.5% a year across all variable mortgage rates for owner occupier and buy-to-let customers.

Customers have been receiving letters today, informing them of the change.

On average the increase will add an extra €27 a month to a mortgage of €100,000 over 25 years.

The change will come into effect for existing customers on 24 October.

It came into effect for new businesses from 31 August.

A spokesperson for the bank, which is part-owned by the Government, said it does not automatically issue news releases to the media on issues like this, or where there is a change that does not affect the majority of its customers.

In a statement, it said the decision was regrettable but necessary, due to the continuing high cost of funding and deposits and the need to return the bank to profitability.

A spokesperson for the bank said it had written to existing customers informing them of the change which was done last week.