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Fixed mortgage rates are falling

Mortgage rates in Ireland are still much higher than the eurozone average, but fixed rates are slowly starting to fall.

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Earlier this month, it was estimated that Irish mortgage holders are paying an eye-watering €800m more in interest than our eurozone counterparts.

The average mortgage rate in the eurozone is 1.72%, but it’s hard to find a rate in Ireland that’s under 3.00% at the moment. Tweet this!

But that might be finally starting to change, albeit slowly, with fixed rate cuts beginning to trickle through for some customers.

In the last few weeks, Permanent TSB and Ulster Bank both cut fixed rates on a number of their mortgages, raising hopes that other banks might react by following suit.

Permanent TSB's fresh cuts

Permanent TSB’s fixed rate cuts range between 0.20% and 0.40% and are reserved for new customers only. Here’s an overview:

Fixed rate type

Old rate

New rate

1 Year Fixed Rate New Business greater than 80% and less than or equal to 90% LTV Mortgage

3.50%

3.30%

2 Year Fixed Rate New Business greater than 80% and less than or equal to 90% LTV Mortgage

3.50%

3.60%

3 Year Fixed Rate New Business greater than 80% and less than or equal to 90% LTV Mortgage

3.90%

3.60%

5 Year Fixed Rate New Business greater than 80% and less than or equal to 90% LTV Mortgage

4.15%

3.75%

While a cut of, say, 0.40% may not sound like a lot in isolation, it can amount to thousands of euro of savings over the lifetime of a loan.

Ulster Bank's changes

Ulster Bank’s fixed rate cuts are available to new customers as well as existing customers who meet certain criteria.

The bank has tweaked its loyalty offerings, making it easier for borrowers to qualify for special rates.

Under Ulster Bank’s new Loyalty Plus programme, customers who pay their mortgage from an Ulster Bank current account and take out a loan of €200,000 or more can avail of the following fixed rates:

  • 2.90% fixed rate for 3 years with a 60% LTV

  • 3.20% fixed rate for 3 years with a 90% LTV

  • 3.19% fixed rate for 5 years with a 60% LTV

  • 3.50% fixed rate for 5 years with a 90% LTV

What are other banks offering?

Let’s say you’re a first-time buyer with an LTV of 90%, looking to take out a fixed rate loan.

With Bank of Ireland, you could get a 3 year fixed rate of 3.45% and with AIB, KB and EBS you could get 3.65%.

If you wanted to fix your rate for 5 years, you could get 3.55% with Bank of Ireland and KBC and 3.80% with AIB and EBS.

So, recent cuts from Permanent TSB and Ulster Bank make their fixed rates for customers with an LTV of 90% some of the most competitive in the market right now.

What are the advantages of fixed rates?

An increasing number of borrowers are opting for fixed rates nowadays. In fact, the Central Bank recently revealed that fixed rate loans now make up 15% of the principal dwelling housing market in Ireland.

Fixed rates bring certainty, which is worth a lot in Ireland’s notoriously unpredictable housing market.

Knowing what your interest rate will be for 3, 5 or 7 years can greatly help with budgeting and peace of mind. But naturally, they come with some drawbacks too.

For example, if you want to increase your monthly repayments or contribute a large one-off lump sum towards your mortgage, you are likely to be hit with penalty fees if you are on a fixed rate.

Also, there is always the risk that variable rates will fall while you’re locked into a fixed rate, leaving you paying more than you have to.

How to find the best rate

Your mortgage repayments are likely to be the biggest monthly expense you ever take on. This makes it the most important financial decision to get right!

With so many complex options out there, picking a bank and rate can be very overwhelming. The best way to ensure that you’re getting the best rate available is to use our Mortgage Calculator, which will allow you to see which option is best for you and your circumstances.

And if you’re already up and running with a mortgage but think you might be paying more than you have to, you can always switch to a cheaper rate with us.

The Central Bank of Ireland recently carried out a study which found that those who switch mortgages have a positive experience doing so.

Making the effort to compare the market and switch mortgages could save you thousands of euro over the lifetime of a loan!


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