Permanent TSB has notified brokers that it will be increasing all its tracker rate products by 0.5% from Friday, August 12.

Departing lender KBC has said it will apply the rate change to tracker products from September 1.

Permanent TSB told Brokers Ireland members that it would notify impacted customers of the changes within ten business days while KBC said it would be contacting customers in the coming days.

The move follows the announcement yesterday by the European Central Bank that it was increasing its interest rates by 0.5%, effective from next week.

The size of the move has sparked concerns that hikes of a similar magnitude could follow in the months ahead.

The ECB is managing the competing challenges of soaring inflation but also an economy that has been slowing considerably against the backdrop of the Ukraine war.

Brokers Ireland said the move heralded a new era of interest rate hikes with little future guidance on where they will go.

"Ten years ago hardly anyone believed or foresaw that the ECB interest rate would drop to zero as it did in 2016 or that it would maintain at this level until now," Rachel McGovern, Director of Financial Services at Brokers Ireland, which represents 1,225 broker firms, said.

"Our advice to mortgage holders who have not reviewed their situation is do so immediately and take professional advice.

"There are still very good long-term fixed interest rates in the market, which mean that people can plan their financial affairs knowing what their financial outlay will be over the longer-term, for periods up to 30 years. And these will suit some tracker mortgage holders, those on the higher tracker rates," she said.

Over 200,000 tracker mortgage holders will be impacted by the change to rates.

Permanent TSB and Bank of Ireland have said they will not apply the interest rate changes to their variable rate product offerings.

AIB didn't specify if it would be altering its variable mortgage rate. However, AIB's variable rate offering is lower than the other pillar banks.