The bank has notified customers this week about a rise in the rate differential on some of its tracker products, with 13,500 customers facing increased mortgage rates because of the move.

Residential mortgage customers will see a two part increase in rates, first rising to Bank Base Rate (BBR) + 2.49% on May 1 then to BBR +3.99% on October 1.

Buy-to-let customers will see tracker rates rise to BBR + 4.49% on May 1.

The bank confirmed that over half of the 13,500 customers affected are on buy-to-let mortgages. Of the total number of customers affected around 80% have a loan-to-value (LTV) of 60% or less.

SVR rises last year by the Bank of Ireland affected 100,000 customers and the bank said in a statement said that increased funding costs had forced this increase in rates.

“This change reflects the significant increase in the cost of funding these mortgages since 2008 and the need for banks to maintain greater levels of capital,” it said.”These changes will affect 7% of Bank of Ireland UK mortgage customers, the majority of which are buy-to-let customers.

“All Bank of Ireland mortgage holders affected by the increase are being notified about the changes.”

All of the mortgages were sold before 2004 and Your Money understands that many of the affected customers took out mortgages with the Bristol & West Building Society, which was purchased by Bank of Ireland in 1997.

Bristol & West operated as an intermediary-only brand after the sale of its branch network and closed to new customers in 2009.

London & Country’s David Hollingworth said the changes had been made using a ‘special circumstances’ clause in customers’ contracts.

“Lenders have been looking at their back books and looking at how to manage them. There are some historical rates which, in today’s market, are looking very unprofitable indeed.

“Bank of Ireland has been deleveraging over a number of years now and has stopped lending in the UK under the Bank of Ireland brand. This is quite a substantial rise but the upside is that there are good rates around now so people do have options.”

The bank also operates Post Office Mortgages in the UK and said that the change would not affect those customers.