Bank of Ireland and Permanent TSB hike their deposit rates 

Over the past year the European Central Bank (ECB) has hiked interest rates aggressively from 0% to 3.75% as anyone with a tracker mortgage will be all too aware.

However the deposit rates on offer to savers have remained pretty miserable.

But it appears that the banks are now coming under pressure to improve their rates as Bank of Ireland (BOI) and Permanent TSB (PTSB) have both come out in quick succession with increases to their deposit rates for customers.

Bank of Ireland 

BOI is increasing the rates on its regular savings accounts by 0.25 percentage points to 1% i.e. its MortgageSaver, GoalSaver, and Childsave accounts. The amount you can save is capped at €15,000 and the new rate is effective from 19 May 2023.

The bank is also introducing two new one-year fixed-term deposit accounts: one for personal customers and one for business customers. Each will offer a rate of 0.75% and there is no limit on how much you can save. 

BOI is also launching a new SuperSaver account that will offer a special rate fixed rate of 1.5% for the first 12 months, capped at €30k, after which it will default to the standard regular saver rate of 1%. As a further incentive, customers will receive a discount of €100 on home or car insurance. And to encourage younger savers there’ll be no minimum monthly lodgement required. SuperSaver will be available from June 2023.

Permanent TSB 

PTBS is also upping its rates. 

It’s hiking its regular savings rates by 0.25 percentage points to 1%. And it’s also upping the rate on some of its fixed-term accounts by the same amount.

For example the rate on its 18-month fixed-term account will rise from 1.25% to 1.50% and the rate on its 12-month fixed-term account will rise from 1% to 1.25%   

The new rates will take effect from 20th June 2023.

You can compare all savings rates across all lenders right here on bonkers.ie.

Poor returns

While it's great to see savings rates begin to creep up, the returns on offer are still well below the rate of inflation. And of course you’ll pay DIRT of 33% on any gains you make.

Also, deposit rates of well over 3% are now available in many countries throughout Europe. While Trade Republic is now offering a rate of 2% to its Irish customers. So these rates still pale in comparison.

However, on the flip side, the main Irish banks have been extremely slow at passing on the recent ECB rate increases to their mortgage customers. This is why Ireland now has among the lowest mortgage rates in the Eurozone. 

While the ECB's main lending rate has gone up by 3.75 percentage points since last July, BOI has only increased its fixed rates for new mortgage customers by 1.50 percentage points and for existing mortgage customers by 1 percentage point for example. And it hasn't hiked its variable rates at all. It's a similar story with AIB and Permanent TSB.  

In essence, savers have been subsidising mortgage customers. So if we want to have higher saving rates it’ll likely come at the expense of higher mortgage rates.

Be careful what you wish for perhaps...

Alternatives to the main banks  

There are plenty of options for your savings other than the main banks. Check out our article on alternative savings options for more information.

We also recorded a podcast this year on alternative savings options if you’d prefer to sit back and listen instead - you can find that episode here!