Mortgage provider Avant Money is to increase some of its interest rates for new customers as a result of rising funding costs.

The lender’s five-year fixed rates are to rise by 20 basis points (bps), while its seven-year and 10-year fixed rates are to increase by 30bps.

It is also to increase the rates on its 15-year and 20-year ‘One Mortgage’ product which guarantees the same rate for the duration of the loan.

The move comes ahead of an expected increase in interest rates by the European Central Bank, possibly as early as next month.

The development is likely to further focus the minds of prospective and existing borrowers over the question of whether to fix their mortgage rate now.

Alongside the increases, Avant Money is to cut its rates on its longer-term 25 and 30-year “One Mortgage” offerings.

While its three and four-year fixed rates are to remain unchanged.

“We are observing considerable upward pressure on funding costs, and recognise that the option to fix for longer may be attractive to many of your customers,” the company said in a statement.

“The One Mortgage pricing reductions are intended to make this option an even more compelling choice for customers.”

The company said existing customers will not see any rate changes, while those in the application pipeline will have until 15 July to complete drawdown at the old rates.

New customers who apply after 13 May will only be offered the new rates.

“If people were putting off fixing or switching until now they have no further excuse,” said Trevor Grant, chairperson of the Association of Irish Mortgage Advisors.

“This is likely to be the first of a number of increases.”

He added that rates have been at historically low levels for some time and mortgage holders should be considering their options to lock in and protect themselves against future rate increases which are inevitable.

“Even those on existing fixed deals should ask their lender if there are break fees to fix with the same lender or elsewhere,” he added.

Avant is not the first mortgage provider to increase its rates.

In March, ICS increased its fixed rates for new customers with rises of between 20-45bps.

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