Irish mortgage lender PTSB said on Wednesday that it is beginning to observe a change in customer behaviour, with some moving to a cheaper variable rate for the first time in a number of years when their fixed rate mortgage term matures.

Analysts at Davy Stockbrokers said the move towards variable rates together with a slowdown in the growth of PTSB's deposits and new mortgage lending in the third quarter will likely result in it lowering its 2024 and 2025 forecasts for the bank.

PTSB said its new lending was up 9% year-on-year in the first nine months of 2023, compared to an increase of 36% at the end of June while customer deposits rose by 0.1 billion euros to 22.7 billion euros in the third quarter.

The bank's guidance on key indicators for this year remains broadly in line with prior market communications, it added.

Ireland saw a huge move towards fixed rates in recent years, with customers keen to take advantage of previously low European Central Bank interest rates by locking in the repayment cost of their mortgage, most often for three or five years.

The ECB has since raised its key interest rate to a record high of 4%, while also signalling that September's 10th increase in just over a year was likely to be its last.

PTSB, which had a 21% share of the mortgage market at the end of September, said that while fixed products continued to represent 97% new mortgage lending so far this year, some of its existing customers were starting to move back to variable rates.

The bank's standard variable rate currently starts at 4.3%, compared to three-year fixed rates of between 4.55% and 5.1%. (Reporting by Padraic Halpin; Editing by Christian Schmollinger)