First Active has announced an increase in its fixed-rate mortgages due to recent increases in long-term bond markets.
A three-year fixed-rate mortgage has increased by a half a percentage point from 3.39 to 3.89 per cent, raising the monthly payment by €26 to just over €600 on a €100,000, 20-year mortgage.
First Active said the decision to raise fixed rates was due to significant increases in long-term wholesale rates over the last month.
Bond markets have been exceptionally volatile in recent months as the outlook for the world's leading economies remains uncertain. Short selling by hedge funds added to the volatility driving bond prices higher and yields lower.
Long-term interest rates have soared recently after Mr Alan Greenspan declared the US central bank would do everything possible to fight deflation. This inflationary rhetoric is bad news for holders of fixed interest securities such as bonds and so pushed prices higher.
In June, the benchmark ten-year US Treasury note had a yield of only 3.11 per cent, a 45-year low. Since then, rates on the ten-year note have soared to around 4.5 per cent.