Lenders pass on Irish base rate increase

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TWO BIG Irish mortgage lenders yesterday passed on Monday's 3 per cent rise in Irish base rates to their customers, thereby ignoring pressure from the Dublin government and breaking ranks with the banks who have held their rates steady.

The rises, announced yesterday by the Irish Permanent, the largest building society, and the Irish Civil Service will add Ir pounds 126 (pounds 131) to monthly repayments on a Ir pounds 60,000 mortgage. Other building societies will also raise their rates before the end of the week.

Irish banks, keen to enlarge their share of the home loans market, are holding off increases, hoping the jump in interest rates, imposed to defend the punt, may be short-lived. The banks' stance followed signals from AIB and the Irish Trustee Savings Bank that they planned to 'wait and see'.

On the Dublin money market the Central Bank intervened to push down one month lending rates from 20 per cent down to 16 per cent. The Central Bank's injection of funds into the market raised hopes that further interest rate rises may now be averted.