Rate drops and new competition provide opportunities for the public to secure better mortgage deals. A mortgage price war has erupted among the main Irish lenders such as Haven Mortgages, AIB, PTSB, Bank of Ireland, and Avant Money.
Irish banks set their fixed and variable mortgage rates largely based on the savings and deposit rates they offer, rather than directly following ECB rates. Recent rate cuts are more a product of competition than ECB policy.
As a mortgage broker, I understand the importance of timing and information when it comes to securing the best mortgage rates. The Central Bank’s recent statistics confirmed that mortgage interest rates rose for the third consecutive month up to the end of March 2024 and many homeowners are now asking if it is the right time to lock into a new fixed mortgage rate.
Despite the recent uptick in rates, there is good news on the horizon. Since March, several mortgage lenders have reduced their mortgage interest rates. Mortgage rates have not returned to the lows of 2022 and perhaps never will in the medium term. However, mortgage rates on offer on the market have changed in recent months.
Currently, fixed mortgage rates range from 3.45% to 7.15%. This does not include some of the higher and unpublished mortgage rates from vulture funds where some mortgage borrowers are trapped.
The stark difference between the highest and lowest mortgage rates makes it more important than ever to shop around. For instance, on a €300,000 mortgage over 25 years, you could end up paying €7,860 more per year on the highest rate compared to the lowest. This substantial difference underscores the necessity of finding the best possible deal.
Price war
A mortgage price war has erupted among the main Irish lenders such as Haven Mortgages, AIB, PTSB, Bank of Ireland, and Avant Money.
This competitive environment has brought forward the prospect of lower mortgage rates for the thousands of mortgage holders nearing the end of their current low fixed-rate terms and also those looking to buy a home in 2024.
But with the European Central Bank (ECB) expected to decrease interest rates in June, some ask why they would fix their mortgage now when rates are about to fall.
It’s a valid question. However, it’s important to understand that Irish banks have already adjusted their rates and are unlikely to decrease them much further, regardless of what the ECB does.
Irish banks set their fixed and variable mortgage rates largely based on the savings and deposit rates they offer, rather than directly following ECB rates. Recent rate cuts are more a product of competition than ECB policy.
This competition is vital, especially given the exits of KBC and Ulster from the Irish market. The Competition and Consumer Protection Commission has highlighted the risks associated with a lack of competition in Irish banking.
Thankfully, new entrants like Avant Money (Bankinter) have seized the opportunity to compete for profitable Irish mortgage business, bringing much-needed competition to the Irish mortgage market.
Meanwhile, it appears that Irish mortgage rates peaked in March 2024. The recent rate reductions, coupled with cashback deals that cover switching costs, make switching lenders an attractive prospect once again.
Many coming to the end of low fixed mortgage rates in 2024 will be relieved that mortgage rates have started to fall.
Shopping around is more important than ever due to the significant difference between the highest and lowest mortgage rates available. While it might seem convenient to stick with your current lender or bank, doing so without exploring other options could result in you paying significantly over the odds.
The combination of recent rate reductions and ramped-up competition in the mortgage market provides an excellent opportunity. But it is vital customers don’t jump at the first offer they see.
- Stephen Hamilton wrote this article on the Irish Examiner website.
