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Irish Independent
Irish Independent
Charlie Weston Twitter Email

Homeowners with variable-rate mortgages urged to switch now to fixed rates at near record low

Fixed rates are near record lows in Ireland, but are expected to rise soon

Homeowners vulnerable to rising mortgage rates have been urged to act now to lock in at current fixed rates, which are close to record lows.

Borrowing costs are rising at a slower pace in this country than across the eurozone. 

Ireland now has the eighth-highest new mortgage rates in the eurozone, having recently been the most expensive. But this situation is unlikely to last.

As many as 200,000 homeowners are on variable rates. There are 250,000 on trackers, which rise or fall when the European Central Bank ( ECB) rate changes.

Some of those on trackers now fear rising ECB rates are making them uncompetitive.

New figures from the Central Bank of Ireland show mortgage rates for new business in this country stood at 2.64pc on average in August, virtually unchanged from July.

Eurozone average rates are catching up and now stand at 2.21pc, up from 2.08pc in July.  

This is highest level since at least August 2017, and almost double the rate this time last year. Ireland’s mortgage rates are now behind those of countries such as Germany and the Netherlands.

Financial experts pointed out that households in these countries tend to take out much longer-term fixed rates compared to Irish households. Fixed rates of up to 20 years or more are typical, which usually have higher rates.

Average Irish mortgage rates are now near record lows.

And this is the first time in more than five years that Ireland hasn’t been among the top five most expensive countries, according to head of communications Daragh Cassidy.

“While rates have begun to shoot up elsewhere, they’ve remained remarkably steady here for now – at least among the main lenders,” he said.

But money markets now expect the ECB’s key refinancing rate to rise by 0.75 percentage points this month, with a further 0.5 percentage point rise in December.

Such hikes would mean the repayments on a tracker with €150,000 left to pay will have increased by €2,000 over a full year since the summer.

Mr Cassidy said anyone on a variable should consider locking into a longer-term fixed rate while rates were still low.

“Regardless of how high the ECB eventually raises rates, variable rates are generally poorly priced compared to fixed rates already,” he said.

“Anyone on a tracker needs to get expert advice to assess their options. Depending on how high rates go, and the margin you’re paying, moving may or may not make sense.”

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