PERMANENT TSB’S decision to introduce immediate increases of between 2 and 3 per cent on its fixed interest rates for existing mortgage holders rolling off fixed or discounted rates has been described as “shocking”.

The bank announced last night it was increasing its two-year fixed term rate from 5.25 per cent to 7.25 per cent while the five-year fixed rate will go from 5.75 per cent to 8.75 per cent. A 10-year fixed rate will increase from 6.1 per cent to 9.1 per cent.

The rate hike is aimed at the bank’s customers who are coming off fixed rates or discounts and are automatically given a 20-day options letter when their fixed-rate period ends.

Permanent TSB said the rate increases for customers coming off fixed or discounted rates would only be available for “a limited time” and stressed they were not the long-term rates it plans to roll out in the coming weeks to replace its suite of fixed rate offerings which were suspended a week ago.

Informed sources have, however, indicated its new fixed rates will be close to those announced last night and will effectively price the State’s largest mortgage lender out of the fixed rate market.

People who are on fixed rates with the bank at present will be unaffected by the rate increases or the fixed-rate suspension, but those on variable rate mortgages will not have the option of switching to a fixed rate in the coming days to avoid the punitive effects of the rates hike.

Bank sources said it had taken the decision to suspend its fixed-rate offerings last week because it could not sustain them at their current prices.

The bank stopped offering many of its more popular fixed-rate products as far back as late 2008.

“This is going to be very difficult burden for people who have already attempted to bring financial security into their lives by fixing their rates,” said Rachel Doyle, director of Professional Insurance Brokers Association.

“A Permanent TSB mortgage holder coming off a fixed rate will be offered a rate of 8.75 per cent to fix for a further 5 years. Effectively people are being forced into accepting variable rates,” she added.

Ms Doyle warned that other lenders were “unfortunately, likely to follow suit quickly. Although there are still some good value fixed rates available, it is unlikely they will exist for much longer.”

Meanwhile, Irish Nationwide Building Society has confirmed it is ceasing with immediate effect to take on new mortgage business or facilitate top-up mortgages following a Direction Order from the High Court.

It confirmed it would honour offers already made, provided they were completed within a stipulated timeframe.