Despite the increase the lender's rates remain among the most competitive in the market.
Bank of Ireland (BOI) has become the latest lender to hike its mortgage rates.
Its fixed rates for new customers (and its existing customers who are looking to re-fix) will all go up by 0.25 percentage points from today.
A hike in rates was widely expected given the huge increase in interest rates from the European Central Bank (ECB) over the past year. However the increase was lower than expected. And BOI's variable rates remain unchanged.
Since last July the ECB has hiked its main lending rate by four percentage points from 0% to 4%. But even after today's hike, BOI has only increased its fixed rates for new customers by 1.75 percentage points and by even less for its existing customers and it still hasn't hiked its variable rates at all (though these were very high to begin with).
Bank of Ireland rates
BOI’s fixed rates now range from 3.65% to 5.25%. While the average first-time buyer with a 10% deposit who chooses its five-year rate can get a rate of 4.25%.
When you consider that the main ECB lending rate is 4%, that’s still good value. And most of BOI's rates still undercut those of its main rivals.
Of course this generosity is largely coming at the expense of savers who are still getting fairly poor returns.
Unfortunately the ECB is almost guaranteed to hike rates by another 0.25 percentage points to 4.25% tomorrow and there’s currently a 50/50 chance it’ll raise rates again in September to 4.50%. This means more rate hikes are almost a certainty from BOI, and indeed all the other lenders, over the coming months.
By the end of the year, the best mortgage rate on offer in the entire market will probably be over 5%, with the average rate even higher.
You can compare all rates and mortgage offers from all lenders on bonkers.ie.
What if I'm in the middle of applying for a mortgage?
Mortgage applicants who already have credit approval from BOI and who draw down their mortgage before 24 August can still avail of the previous fixed rates.
Increasing savings rates
In better news, BOI is also upping some of its savings rates.
- The rate on its SuperSaver account will go up by 0.50 percentage points to 2% (including for accounts opened since its launch on 28 June).
- BOI is launching a new two-year deposit account paying 2% interest for personal and business customers.
- The fixed rate on its new one-year deposit account will increase by 0.25 percentage points to 1.5% for both personal and business customers.
