Finance Ireland is to increase the interest rate applied to certain mortgage products from later this month.

A Finance Ireland spokesperson confirmed the reason for the rate rise was due to an increase in funding costs.

The lender said that rates for three and five year fixed rate products will increase by 120 basis points across all loan-to-value bands.

Rates for its longer-term products (10, 15, 20 and 25 years) will increase by 50 basis points, but its variable and buy-to-let rates will remain unchanged.

Finance Ireland said the increases will apply from Monday June 27.

The move comes ahead of an expected increase in interest rates by the European Central Bank next month.

Last week the ECB signalled that it will deliver its first interest rate hike since 2011 in July, followed by a potentially larger move in September if inflation does not cool down.

Mortgage provider Avant Money said last month it would increase some of its interest rates for new customers as a result of rising funding costs.

The lender's five-year fixed rates are to rise by 20 basis points (bps), while its seven-year and 10-year fixed rates are to increase by 30bps.

It is also to increase the rates on its 15-year and 20-year 'One Mortgage' product which guarantees the same rate for the duration of the loan.

Non-bank lender ICS also increased its fixed rates in recent months for new customers as a result of the rising cost of finance in the international markets.