Saturday 16 December 2017

Mortgage holders told 'switch to fixed rates'

Charlie Weston Personal Finance Editor

THOUSANDS of homeowners facing the prospect of big increases in mortgage costs have been told that now is the time to fix their rates.

Around 200,000 homeowners are on variable rates, with others coming to the end of their fixed-rate period.

Up to now variable rates were so low that choosing a fixed rate was too expensive -- but that is beginning to reverse.

AIB has announced plans for two rises in its variable rate in quick succession, with a combined increase of 1pc.

This will mean customers with a €200,000 variable mortgage are facing an additional €120 in monthly repayments.

Bank of Ireland and ICS are due to raise variable rates by 0.5pc next month.

The two lenders have around 150,000 customers on variable rates. But many other borrowers who have mortgages with the two lenders and other banks are due to revert to variable rates after coming to the end of fixed rates.

The hikes in variable and (LTV) loan-to-value variable rates mean the costs of paying for these mortgages has become close to the cost of a fixed rate, Michael Dowling of the Independent Mortgage Advisers Federation said.

And he warned that variable rates will continue to rise, particularly those at AIB.

Taoiseach Enda Kenny told the Dail this week that AIB's move to hike variable rates twice was a commercial decision and the Government was not getting involved.


Mr Dowling said AIB's LTV variable rate for those who borrowed 80pc of the value of their homes will see their rates go to 4.24pc.

These people can now lock in to a fixed rate for three years at 4.88pc. The difference in monthly repayments between the fixed and the variable rate will be €70 a month on a €200,000 mortgage.

Bank of Ireland's typical LTV variable rate for existing borrowers is going to 4.5pc, but its fixed rate for three years is 4.69pc.

Mr Dowling warned that banks will soon hike fixed rates, so there is an opportunity to lock in to these rates now.

Meanwhile, Bank of Ireland said yesterday it had launched a new €2bn fund for first-time buyers and those who want to move home.

But the Irish Brokers' Association (IBA) said banks were making it too difficult for potential buyers to get loan approval.

Irish Independent

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