Non-bank lender Finance Ireland said it will raise its variable and fixed rates for its mortgage products by between 1.5% and 2%.

Finance Ireland said the new rates will come into effect immediately for new business.

Mortgage applications which have been approved and which are drawn down before close of business on Friday of this week will continue to avail of existing rates, it added.

After the rate increase, Finance Ireland said its 20-year fixed rate mortgage will be priced from 4.6% to 5% depending on the loan-to-value percentage band.

A spokesperson for Finance Ireland said that over 80% of its loan applications in the past year have been for fixed terms of 10 years or more as customers look to lock in certainty in a period of widely forecasted interest rate increases.

"Overall, we have funded strong mortgage volumes through this year, however these interest rate increases we are implementing are a direct result of significant increases in funding costs over recent months," the spokesperson added.

Today's announcement follows an increase in interest rates that the company applied to certain mortgage products in June.

At the time it said the reason for the rate rise was due to an increase in funding costs.

In July Finance Ireland completed a €50m equity raise with support from two global investment managers.

Last week the company reported pre-tax profits of €28m for last year, up from €9.7m for 2020.

It also reported record new lending of over €1 billion, up 54% on 2020.