OTHER lenders are now expected to follow the lead set by the Irish Permanent, which increased its mortgage rates by half a percentage point yesterday.

Ireland's biggest mortgage lender announced that all its variable rate loans would be increasing by half a point, while fixed rate loans have also increased.

The new fixed rate loans now range from 7.25 per cent for a three-year loan to 8.75 per cent over 10 years.

Irish Permanent's new variable annuity rate is now 7.5 per cent from 7 per cent. This increases the repayments on a £40,000 mortgage to £327.20 from £314.80 over 20 years. Repayments on a £60,000 loan will rise to £490.80 from £472.20.

A spokeswoman for the bank said rates for savers would also be increasing by around the same amount. Final details will be released at the end of the week, she added.

Mr Martin Walsh, head of lending at the EBS, said some adjustment of the society's rates can be expected. "This is a useful timely reminder of the Central Bank's concerns on credit growth," he noted.

First National is expected to raise its rates today or tomorrow, while TSB said it will also be responding in the next couple of days.

Irish Nationwide chief, Mr Michael Fingleton, said he is waiting to see how the market develops. "It's too early to make any decision," he said. "But if a lot of others move we will have to have a look at it."

Spokesmen for the two main banks said they are continuing to monitor the situation.

Bank of Ireland has one of the most expensive variable rates on the market at 7.45 per cent for loans over 80 per cent of value, compared to 6.6 per cent at EBS.