CIMB Thai Bank (CIMBT) has spearheaded the hike in benchmark lending rates by raising its minimum retail rate (MRR) by 0.125 percentage points.
The small bank also increased time-deposit rates by 25 basis points to maintain its depositor base.
The rate increases take effect from today.
The bank's new MRR is 7.875%, up from 7.75%, while other prime lending rates such as minimum lending rate (MLR) and minimum overdraft rate (MOR) remain unchanged at 7% and 7.5% respectively, said Adisorn Sermchaiwong, senior executive vice-president of CIMBT.
The MRR increase should affect only the bank's mortgage borrowers because their principal payment will be lowered if they pay the amount due, he said.
Mr Adisorn said it's possible the MLR and MOR will rise in the future.
"We are raising the interest rate to keep pace with funding costs climbing higher after the policy interest rate was lifted by 0.25 percentage points in December," he said.
After the Monetary Policy Committee raised the policy rate by 25 basis points for the first time in more than seven years in December, banks appeared to be reluctant to pass through the rate hike, largely due to excessive liquidity. Siam Commercial Bank, Kasikornbank and Government Savings Bank have raised their time-deposit rate by 25 basis points.
The MRR hike could affect some new loans, Mr Adisorn said, but higher net interest rate income will nullify the impact.
"We expect that this year's loan target of 28 billion baht will not be hurt by the MRR rise, as our mortgage rate is among the three lowest in the industry," he said.
CIMBT's mortgages outstanding amount to 81 million baht, accounting for nearly 40% of total bank loans.
Mr Adisorn said the bank had extended the promotional rate for mortgage refinancing at 2.98% to the end of March from the end of January.
