Permanent TSB, one of Ireland’s leading banks, has announced an increase in saving and deposit rates for its customers. This move comes in response to Bank of Ireland’s recent rate hike and aims to provide more competitive options for savers. The new rates, which will come into effect on September 26th, include a 3% rate on a 3-year fixed-term deposit, the highest rate available for this term. Additionally, the rate for regular savers will increase to 2.5% from 1%, applicable to both online and 21-day regular saver accounts with balances up to €50,000. The bank will also raise the rate on 18-month fixed-term deposit products to 2.5% from 2%, and on the 12-month fixed term to 2% from 1.75%.
Patrick Farrell, the Retail Banking Director at Permanent TSB, emphasized the importance of deposit customers and expressed delight in announcing these rate increases. He stated, “we’re delighted to announce this latest set of increases to ensure that our customers are rewarded with competitive deposit rate products in today’s higher interest rate environment.” Farrell also highlighted the bank’s “market-leading” rate for a 3-year fixed term deposit product and assured customers that the bank would continue to review its rates to remain competitive.
The move by Permanent TSB follows Bank of Ireland’s announcement earlier this week, making it the first of Ireland’s pillar banks to offer a 3% rate on certain products. The banking sector has faced increasing pressure from the government to raise rates for savers, especially in light of the European Central Bank’s nine consecutive rate hikes, which brought the deposit rate to 3.75% by August 2023. However, Irish banks have been slow to pass on these rate increases to customers, with just 7% of interest rate hikes being passed on to savers, according to data from Standard and Poor. This has led to criticism from government officials, including Minister Simon Harris, who described the rates on offer for savers as “offensive.” He highlighted the disparity between increased rate hikes for mortgage holders and the lack of benefits for savers. In fact, Irish mortgage rates have risen by nearly 50% in the past year, as of July 2023, according to the Central Statistics Office.
Finance Minister Michael McGrath expressed hope for improvements in the coming weeks and called for the ECB interest rate hikes to be passed on to savers. With Permanent TSB’s rate increase, the pressure now falls on AIB, the only remaining pillar bank yet to update its saving rates for customers. All three lenders have posted significant profits in the first half of the year, benefiting from the ECB’s aggressive interest rate campaign.
Daragh Cassidy, Head of Communications at Bonkers.ie, welcomed the rate increases as good news for savers. However, he expressed concern that rising rates could coincide with additional hikes for mortgage holders. Cassidy encouraged those with significant savings in demand deposit or current accounts to consider moving their money to fixed-term savings accounts, provided they do not require immediate access to the funds.
In conclusion, Permanent TSB’s decision to raise saving and deposit rates aims to provide more competitive options for customers in a higher interest rate environment. This move follows Bank of Ireland’s similar rate hike and comes as Irish banks face pressure to pass on the ECB’s rate increases to savers. The government has criticized the banking sector for the disparity between rate hikes for mortgage holders and the lack of benefits for savers. With hopes for improvements in the coming weeks, all eyes are now on AIB to update its saving rates and provide further relief for customers.