Bank of Ireland customers warned to avoid new fixed rates
Customers of Bank of Ireland have been advised not to lock in to fixed rates, even after the bank reduced them.
The bank has cut mortgage rates for those who are prepared to lock in for a number of years.
It has reduced its one, two, three, five and 10 year rates. All of the reduced rates will be available to new and existing customers from Tuesday.
But the bank continues to defy Finance Minister Michael Noonan by refusing to reduce its variable rate, which is one of the highest in the market.
Cuts of between 0.10pc and 0.30pc to fixed rates have been implemented, with the bank insisting it was the second time it cut its rates this year. The biggest cut is for the bank's 10-year rate.
Existing homeowners and new buyers will be able to lock into to a two-year rate at 3.6pc if their property is worth at least 40pc more than they have borrowed.
But consumer advocate Brendan Burgess described the cuts as "rubbish" and warned people not to lock in.
Read more: Fixing is a big call for homeowners
He said variable rates would come down and those seeking to extract themselves from a fixed rate before it finishes would be forced to pay a penalty.
Stockbroking analysts have pencilled cuts in Bank of Ireland's variable rate. Goodbody Stockbrokers' Eamonn Hughes has modelled a 0.5pc cut in the bank's variable rate.
Mr Burgess said: "These reductions are rubbish. Borrowers should not fix as Bank of Ireland will bring down its variable rates in the future."
The founder of Askaboutmoney.com said he was disappointed the bank did not reduce its variable rate, and said the fixed-rate decreases were small.
Variable rates here are among the highest in the eurozone. Bank of Ireland charges 4.5pc, one of the most expensive.
Anyone on a variable rate will be able to opt for the new rates.
Read more: Mortgage-approval fall blamed on new rules
Last week Mr Noonan extracted a promise from Bank of Ireland and five other leading lenders to cut their variable or fixed rates following months of controversy over high variable rates being paid by 300,000 mortgage holders.
The banks were told they face a "penal levy" if they resist reducing their mortgage rates.
The warning came after Mr Noonan confirmed banks had agreed to start lowering their variable mortgage interest rates from July. He said he has the option of hiking the levy on lenders if they fail to reduce rates and said the Government could also enact legislation to give the Central Bank powers to regulate high variable rates.
But Central Bank governor Patrick Honohan argued against regulators getting powers to force banks to lower variable rates.