Bank of Ireland hikes its fixed mortgage rates again
Daragh Cassidy
Head Writer

The latest hike will add close to €100 a month to the average first-time buyer mortgage.

In a widely expected move, Bank of Ireland (BOI) has become the latest lender to hike its mortgage rates

All its fixed rates for new customers are going up by 0.75 percentage points.  

Its fixed rates for existing customers will go up by 0.50 percentage points (these are customers who are coming to the end of their current fixed rate period and are seeking to re-fix, and tracker or variable rate customers who want to move to a fixed rate).

Like all the main lenders, BOI has kept its variable rates unchanged for now – though these were already very high to begin with.

Bank of Ireland's new fixed rates 

Here's a look at BOI's new fixed rates for first-time buyers, as well as existing customers, which are effective immediately.

As outlined below, BOI offers a 0.50 percentage point discount across all its fixed rates for those who buy a property with a BER of B3 or better.

The lowest rate on offer will now be 2.90% (compared to 2.15% previously) and just 1.90% up until November.

BOI fixed rates new customers*

Previous rates

New rates

Standard Rates

Green Rates

Standard Rates

Green Rates

1 year

3.15%

2.85%

3.90%

3.60%

2 years

3.15%

2.85%

3.90%

3.60%

3 years

3.25%

2.95%

4.00%

3.70%

5 years

3.25%

2.95%

4.00%

3.70%

10 year LTV <80%

3.55%

3.25%

4.30%

4.00%

10 year LTV >80%

3.75%

3.45%

4.50%

4.20%

High value rates**

4 years

2.45%

2.15%

3.20%

2.90%

5 years

2.75%

2.45%

3.50%

3.20%

7 years

2.80%

2.50%

3.55%

3.25%

*with up to 3% cashback

**for loan amounts >€250,000 and no cashback

BOI fixed rates existing customers

Previous rates

New Rates

1 year

2.90%

3.40%

2 year

2.90%

3.40%

3 year

3.00%

3.50%

5 year

3.00%

3.50%

10 year LTV <80%

3.30%

3.80%

10 year LTV >80%

3.50%

4.00%

Why the increase?

Since last July the European Central Bank (ECB) has hiked rates from 0% to 2.50%. But until today BOI had only hiked its fixed rates by 0.25 percentage points back in November. So even after today’s move, BOI has passed on less than half the ECB rate increase.

This compares to rate hikes of one percentage point from AIB and just under one percentage point on average by PTSB over the past few weeks.

Unfortunately, the ECB is expected to hike rates again by another 0.50 percentage points to 3% when it meets next week. As a result, further rate increases from BOI and its main rivals AIB and PTSB are almost guaranteed over the coming weeks.

At the moment the cheapest rate in the entire market is a four-year fixed rate of 2.90% from BOI (albeit with several caveats). By the end of the year, the cheapest rate on offer is likely to be well over 4%.

Cost  

Today’s move will cost the average first-time buyer (someone borrowing around €250,000 over 30 years) close to €100 extra a month in repayments. So it’s not an insignificant amount.

However, people in the process of applying for a mortgage with BOI and who have credit approval have until 21st Feb to avail of the old rates. Though one would have hoped a slightly longer time frame could have been given. 

Higher rates are likely to significantly cool the property market. Indeed prices fell by 0.20% in Dublin in November according to the CSO. However, to maintain affordability, prices would need to fall significantly (by up to 30%) to fully compensate for a 3% rise in interest rates – presuming the full ECB hikes are eventually passed on. 

Deposit rates on the up

In slightly better news, BIO is launching a new one-year fixed-term deposit account offering 0.50% interest for customers with balances up to €100,000.

And it's hiking its regular savings rate from 0.25% to 0.75%.

Nevertheless, these are still pretty paltry returns given inflation is still running at over 8%...

You can find out which financial institution offers the best value savings accounts in Ireland here. 

Compare mortgage rates on bonkers.ie 

Whether you’re a first-time buyer or looking to switch to a fixed rate, on bonkers.ie you can compare the different interest rates on the market with our free comparison service

Here you can compare interest rates, incentives and cashback offers from Ireland’s main lenders.

When it’s time to apply for or switch your mortgage, you can submit an online enquiry through our mortgage broker service and one of our experienced financial advisors will call you back to get your application started.

Check out our other mortgage articles

If you would like to learn more about the mortgage application process, take a look at our other related articles. 

Keep up to date with the latest mortgage news and tips with our blogs and guides pages.

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