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Dan White: Home in on a fixed rate deal , while you still can

Last week Permanent TSB raised its variable rate mortgage rate by 0.5pc.

This is the second time that the Permo has pushed up its variable rate having previously increased rates by 0.5pc last July.

At the time, none of the other Irish-owned banks followed the Permo's example.

This was due to a number of reasons. For a start, the Permo has funded a far higher proportion of its loan book, more than two-thirds, from the wholesale inter-bank market rather from old-fashioned deposits than the other Irish-owned banks.

Secondly, with NAMA still at the planning stage, none of the other Irish-owned banks wanted to antagonise the banks at what was a very politically sensitive time.

Not this time. While the other Irish-owned banks aren't under quite as much funding pressure as the Permo, they are paying much more for money -- even retail deposits -- than the official ECB rate of 1pc. This has been eating into their profits.

With NAMA now almost up and running, there is no longer any need for the banks to keep the Government sweet. What this means is that the other Irish-owned banks will follow the Permo's example sooner rather than later.

That's the first piece of bad news. The second piece of bad news is that most of the banks have also hiked their fixed rates.

While some banks are offering special fixed rates for new customers, I suspect that your chances of getting one of these deals lies somewhere between zero and nil.

In practice, most customers looking for a fixed rate will have no option but to take whatever is on offer from their existing lender.

Bank of Ireland is already charging existing customers 4.6pc for a two-year fixed mortgage, 4.7pc for three years and 4.9pc for five years.

Ulster Bank is almost as expensive, charging 4.2pc for a two-year fix, 4.3pc for three years and 4.95pc for five years.

And as for the Permo, it isn't quoting a fixed rate for existing mortgages.

However, it will charge you 5.25pc for a two-year fixed rate, equity-release loan and 5.75pc for five years. Thanks but no thanks.

The news is slightly better for AIB and EBS customers. AIB is charging its existing customers 2.8pc for a two-year fixed rate, 3.19pc for three years and 3.86pc for five years while EBS will hit you for 3.15pc for two years, 3.65pc for three years and 4.25pc for five years.

If I were either an AIB or EBS customer I would be tempted to grab one of these fixed rates while they are still on the table.

Last Wednesday, Tanaiste Mary Coughlan revealed that she and her officials were "examining the feasibility" of a funding scheme for small businesses where the State would guarantee the money lent by the banks. Unlike some of the lovely girl's other wheezes, this is potentially a very good idea.

Unfortunately we still don't have any detail on how the scheme would work, how much funds the Government would guarantee, who would qualify or even when it might start.

Don't hold your breath.


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