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'Switch home loans now to beat rate hike'

THOUSANDS of mortgage holders are being advised to switch to fixed interest rates now to avoid big increases in costs.

THERE are around 200,000 homeowners currently on variable rates, while others are coming to the end of their fixed-rate period.

Until now, variable rates were so low that choosing a fixed rates was too expensive. However, experts say that situation is now beginning to reverse.

Just one in seven Irish mortgage holders choose a fixed rate, compared with other European countries where the majority are on fixed rates.

However, AIB has announced plans for two rises in its variable rate in quick succession, with a combined increase of 1pc. The figures show that customers with a €200,000 variable mortgage are facing an additional €120 in monthly payments.

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

It is believed that the two lenders have around 150,000 customers on variable rates.



Warned

However, 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.

Michael Dowling of the Independent Mortgage Advisers Federation said that the hikes in variable and loan-to-value variable rates mean that the costs of paying for these mortgage has become close to the cost of a fixed rates.

And he warned that variable rates will continue to rise.

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

Mr Dowling added that there is a compelling argument beginning to emerge to look at fixed rates.

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 said that banks were making it too difficult to get loan approval


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