Interest rates – what’s new?
Disinflation in the Euro area has led to optimism that mortgage interest rates may start to decrease and we are now starting to see this trickle through.
In the last month the big banks have gone to war on their Green mortgage offering. PTSB have introduced a 3 year fixed Green rate to add to their 4 year fixed offering, AIB Group reduced their Green rates and the very next day BOI withdrew their Green rate and introduced an ‘EcoSaver Mortgage’ product.
Green rate mortgages first came to the Irish market in 2019 and since then they have been on offer from Bank of Ireland, Permanent TSB and AIB Group including Haven Mortgages and EBS.
Green mortgage rates are available where your building energy rating or BER is A or B. All new homes have an ‘A’ energy rating and as such are eligible for Green mortgage rates.
The lowest Green rate on the market is on offer from AIB and Haven Mortgages at 3.45%. This rate is available from Haven Mortgages for all loan to values. AIB tier their rates starting at 3.45% rising to 3.65% for a 90% mortgage.
PTSB introduced a 3 year fixed Green rate starting from 3.8% to add to their 4 year rate offering at 4%. PSTB also offer a 2% cashback on some of their Green products which can be very attractive to cash strapped first time buyers.
Bank of Ireland have withdrawn their Green rate in favour of an EcoSaver Mortgage. This new product has 64 different rates depending on fixed term, mortgage amount and BER.
The product essentially allows for a discount on their rates based on energy rating. The largest discount is 0.35% for A rated homes, right down to 0.05% discount on standard rates for a G energy rating. BER exempt homes have no discount.
97% of new homes built since 2015 were ‘A’ rates homes. BER certs are valid for 10 years. If you have a mortgage with BOI and are reviewing rates then you could look to switch from BOI with best rate offering 3.8% to Haven Mortgages who would offer a Green rate of 3.45%.
As such there is an opportunity for those existing mortgage holders who have a positive energy rating to switch their mortgage and save significantly.
The lowest rate on the market is now 3.45% but rates range right up to 7.15%, choosing the wrong rate is a very costly mistake and as such you need to do your research or get market based advice when assessing options.
Taking a €300,000 mortgage with mortgage term of 30 years the difference between these two rates is a whopping €687 per month or almost €8,250 per annum.
Not all lenders need your home to be Green to get a good rate. If you dont fall into the Green category then Avant Money reduced rates last week with their 4 year fixed rate at 80% loan to value or lower starting from 3.6% plus a 1% cashback offer. Excellent offering and a quick approval process make Avant a very attractive proposition.
Not only have we seen interest rates reduce but we have also seen lenders introduce or enhance switcher cashback offers. These switcher packages range from €1,500 to 1% and 2% of the mortgage back in cash at draw down.
To make switching easier many of the lenders have introduced reduced document journeys to make the application process of switching more efficient.
The question for many is will rates drop further over the coming months?
The three main pillar banks AIB Group, BOI and PTSB have set out their stall over the last month so it may be some time before they move again but it could be expected that others may follow.
Non bank lenders such as Finance Ireland have rates up to 7.15%, these lenders fund via markets and as the cost of funds decreases you would hope to see that these lenders pass on rates.
The expectation is that we should see rate decreases over the coming months. A collective drop in rates across the lending market is not going to happen fast. However, we can expect to see lenders tweaking key rates, such as the pillar banks with their Green offering, to remain competitive as they continue to compete for market share.
It would take extraordinary economic circumstances to see mortgage interest rates drop to the sub 2% level they were in 2022.
Rates from 3.45% in the current market are very attractive and for many their priority is to lock down a competitive rate on what is their largest financial commitment.
There are now ten mortgage lenders in the Irish market, if you go to one lender you miss out on what 90% of the market has to offer.
With rate reductions, switcher packages and reduced document journeys now is the time for the almost 70,000 mortgage holders rolling off fixed rates in the next 12 months to review options if coming to the end of a fixed rate period.
At doddl we offer lowest market mortgage interest rates, cash back offers and will work with you to secure the best mortgage for your circumstances. Get in touch with our team – provide some information and we will come back to you with options within 24 hours – Mortgage Switching Our service is always free. Take ten minutes to see if you can save by reviewing your rate.
