Homeowners near end of fixed rates urged to act fast to lock in low rates
Mortgage rates in this country remained broadly unchanged in July compared with the previous month.
However, there are fears that mortgage interest rates will rise in the coming months with the European Central Bank (ECB) due to announce a second rate rise tomorrow.
Mainstream lenders did not raise mortgage rates when the ECB upped its key lending rates in June, but there are concerns they may move after this week’s rate rise.
New statistics from the Central Bank of Ireland show that mortgage rates in this country remain below the Eurozone average.
This has prompted calls for those coming near the end of a fixed rate to act fast to lock the current rates before they start to rise.
Brokers said it is worth seeing if they can break out of a fixed rate early, ahead of mortgage costs rising in the coming months.
The average interest rate on a new mortgage in Ireland stood at 3.48pc in July, broadly unchanged from June.
Across the Eurozone, the average rate rose for the fourth month in a row to 3.54pc.
Mortgage rates across the Eurozone continue to vary widely, ranging from 1.91pc in Malta to 4.45pc in Latvia.
Rates also vary widely in Ireland.
An analysis by Bonkers.ie shows that for the average first-time buyer borrowing €300,000 with a 10pc deposit, variable rates range from 3.85pc to 4.85pc.
Rates for a three-year fixed mortgage range from 3.20pc to 5.45pc.
Daragh Cassidy, Head of Communications at Bonkers.ie, a bill switching site and mortgage broker, said: “In recent weeks, rates in many Eurozone countries have edged upwards as a result of the ECB’s rate hike in June and in anticipation of further hikes later in the year, the first of which is likely to come as soon as tomorrow.
“Although we’ve seen fairly big rate increases from some of the smaller lenders, such as ICS Mortgages and Nua Money, rates from AIB, Bank of Ireland and PTSB, which together account for around 90pc of all new mortgage lending in Ireland, have remained unchanged.”
This was because these lenders are able to rely on their sizeable deposit base for a large portion of their mortgage lending.
Chief executive of mortgage broker Doddl.ie Martina Hennessy appealed to existing mortgage holders not to gamble on where rates go next.
The June ECB rate increase served as a reminder that the rate environment can be volatile.
“We are seeing more homeowners take the view that there is little benefit in remaining exposed if they can secure a competitive rate now. Borrowers are increasingly looking to lock in certainty rather than gamble on where rates go next.”
With variable interest rates around 0.75 percentage points higher than fixed rates, Ms Hennessy said people can still save a lot of money while bringing certainty to their monthly mortgage repayments by switching.
“Fixed term products are highly competitive right now, with rates starting from 3pc for terms ranging from one to 30 years,” she said.
The hike in ECB rates this week will mean that around 120,000 tracker mortgage-holders will pay more.
A couple with €150,000 remaining on their tracker over 10 to 15 years will to pay an extra €18 a month, or just over €200 a year. This is on top of a similar increase in June. Tracker mortgage rates move in line with ECB rates.