Bank of Ireland cuts mortgage rates as competition heats up
Bank of Ireland has cut its mortgage rates as banks scramble to benefit from the rising mortgage market.
It is the fourth bank in two months to cut rates.
But the banks are only cutting fixed rates as they do not want borrowers switching lenders to get better rates.
Bank of Ireland has cut its fixed rates by up to 0.35pc in a move that will mean big savings for new and existing customers.
The reductions will mean savings of €430 a year for someone who has a mortgage of €270,000 and fixes for three years.
The bank has reduced its one, two and three-year fixed rates for both new and existing borrowers.
New borrowers with large deposits, and existing mortgage holders with large amounts of equity in their homes, will qualify for the lowest interest rates.
This is because the bank is offering fixed rates with the interest rates determined by the loan to value (LTV).
Existing Bank of Ireland mortgage holders who have a loan to value of between 61pc and 80pc will be able to get a two-year fixed rate of 3pc, down from 3.25pc.
The five-year LTV rate, for those with an LTV of at least 80pc, comes down by 0.10pc to 3.20pc for existing borrowers.
Permanent TSB, KBC Bank and Ulster Bank have all announced cuts to fixed rates in the last two months.
Finance experts said banks were now competing hard for market share due to growing demand for mortgages, despite the shortage of properties to buy.
The focus was on fixed rates as this locks in borrowers and stops them switching lenders. And borrowers were also opting for fixed rates, as the European Central Bank key interest rate is expected to start rising next year, experts said.
Simon Moynihan of price comparison site Bonkers.ie said there was now a trend of banks cutting fixed rates, despite the fact Irish households are still paying substantially more on their mortgages than their European counterparts.
"Bank of Ireland is now the fourth bank in just two months to cut fixed rates, and its cuts of up to 0.35pc could mean substantial savings for new borrowers, especially since the Central Bank has reported that more than half of new mortgages are now fixed rates," he said.
In April KBC cut its fixed rates for mortgage holders. It reduced its rates by up to 0.35pc for new and existing customers.
And Ulster Bank and Permanent TSB reduced fixed rates.