Responding to the recent Central Bank Retail Interest Rates publication for January, Brokers Ireland said while the weighted average interest rate on new Irish mortgages is almost a quarter percentage point (0.23 percent ) lower than the euro area average as a whole it is showing increased upward momentum, having risen 24 basis points in one month, from 12 the previous month.
Rachel McGovern, Director of Financial Services at Brokers Ireland said given the number and level of increases announced by Irish lenders since January, the situation will have deteriorated for borrowers since then, except those who are on fixed mortgages where lenders cannot increase their interest rates for the period of the fix.
“There are about 315,000 borrowers, including tracker mortgage holders, on variable rates. Just over a quarter of these are on trackers which automatically see increases when the ECB raises its rate. The remainder are exposed to the decisions of their lenders, who while slow at the beginning to increase rates following ECB rate rises, are now moving more quickly to apply increases.
“While the remaining 400,000 plus mortgage borrowers are on fixed rates, over six in ten are fixed for less than three years.
“Many of these will be exiting their fixed rates over the next year or two, and coming out into a very uncertain and worrying climate, given the hawkish statements coming from the European Central Bank. The organisation has made it quite clear it is not going to stop at a further interest rate rise this month," Ms McGovern stated.
She said all mortgage holders who have not done so should review their positions, and ideally seek the advice of a mortgage broker.
“There are still good fixed rates in the four to five percent range to be got for long periods of ten years. There are also five year fixed ‘green mortgage’ rates of 3.2 percent upwards (depending on loan to value ) for those with homes that have a BER rating of B3 or better.
“Most lenders have pulled the very best long-term fixed interest rates from the market, particularly those for longer than ten years.
“However, there are still substantial savings to be achieved by many borrowers but I cannot emphasise strongly enough that time is of the essence,” she warned.
