Mortgage Rates Ireland

With the ECB rate remaining at 1% in January - back to it’s all time low - there are signs of some growth in the mortgage market. It is harder to get a mortgage now than it was 3 or 4 years ago - but prices are cheaper too.
PTSB recently reduced rates for new customers - and first time buyers with a good steady job and a 20% deposit can get rates as low as 3.04%

See a list of the Lowest Mortgage Rates 2012 Here

Some good news for most Irish mortgage payers - the ECB has cut interest rates again and they are now down from 1.25% to 1% - which is back to the all time low.

See the list of lowest mortgage rates in Ireland here

After the ECB rate cut to 1.25% - which takes effect today (Nov 9th 2011) - all tracker mortgage rates will be cut by 0.25%. For those borrowers on variable rates - a reduction in their rate is not guaranteed. Each lender sets their variable rates independently - and are not tied to teh the ECB rate . (although many seem to increase rates when the ECB raise their rate).

Some banks have not increased rates in recent months - and so might not drop them now. See the latest list of Variable Mortgages in Ireland here .

The current ECB interest rate is 1.25% - it was reduced from 9th November from the previous level of 1.5% . It was 1.5% from July to November 2011 .

See more about the latest ECB Interest Rates here

Most Irish lenders have been gradually increasing mortgage rates over the past year.
As they struggle to retain capital the banks have to try and get more return from their mortgage loans.
The ECB rate increased from 1% to 1.5% - with two increases of 0.25% in April and July 2011.

EBS is due to inrease its standard variable mortgage rate by 0.25% to 4.93% from 1st October.
BOI is raising rates by 0.5% in October also. AIB is expected to follow suit soon after.

KBC increased variable rates by 0.25% on September 1st.

See the latest Mortgage Rates in Ireland here

ECB rates were not increased in May or June 2011 - but mortgage rates are still creeping up.

Ulster Bank will increase the variable rate from July 1st by 0.6pc to 4.95pc .

EBS this week also annpunced an increase to its standard variable rate by 0.25pc. The new rate will be 4.68% with effect from August 1 .

This is the second time in 2011 that EBS has raised the variable rate.

It also emerged yesterday that Permanent TSB has followed its hike of 1pc in its variable rate at the start of the year with another increase in the past few weeks.

See tables of the Best Mortgage Rates in Ireland

At the height of the property boom - mortgage lenders were supposed to stress test borrowers to make sure thay could cope if interest rates rose.
Prior to September 2007 the Regulations were that 2% was added to the lenders rate.
Fixed rates for 5 years or more were exempt from this stress test - which was the reason there were so many 5 year fixed rate mortgages given out in 2006 and 2007.

Brokers pushed these 5 year fixed rates - knowing that the borrowers would not meet the stress test. Those fixed mortgages are now coming to an end just as variable rates are rising. Those 5 year fixes meant that the borrowers never benefitted from the ECB rates falling.

From Sept 2007 - the stress test was changed to ECB plus 2.75%.. All mortgages were supposedto be stress tested. But don’t forget - it was the Financial Regulator who was supposed to keep an eye on these things. We all know what a mess he made of other financial matters - so it’s hardly suprising if he missed the stress tests on mortgages.
At the time the ECB rate was 4% - so in theory nobody should have got a mortgage if they could not afford the repayments at 6.75% !

Now we have people moaning because tracker rates are going up by 0.25%. Many trackers are going to be no more than 2.5% - many will be less than that.

Information on Lowest Mortgage Rates Here

The press are announcing the ECB interest rates increase as if it will mean thousands of Irish mortgage payers having to default on their mortgages. This 0.25% increase to 1.25% - is the first increase since 2006.
People on tracker mortgages have been paying rates as low as 1.5% since May 2009.
Someone who bought a house with a small deposit in June 2007 - when the ECB rate was 4% - could have got a tracker mortgage of ECB plus 0.75% - that was a rate of 4.75%. If the lenders did the stress test as they were supposed to - and if the borrower didn’t make up ficticous lodgers - they should have been able to proove thay could afford the mortgage if the rate went up by 2% - ie 6.75% .

On a Mortgage of 300,000 Euro - the initial repayments at 4.75% would have been €1710 a month. After mortgage tax relief - this would be €1422

That tracker mortgage rate has dropped from 4.75% to 1.75% since May 2009 The repayments are now €1235 (about €1145 after tax relief) . This is a drop of about a drop of €187 a month . There were gradual drops in the rate since October 2008 - so the total reduction in repayments is more than that.
Hopefully - those homeowners in that position have either been saving the extra money or have been overpaying the mortgage and reducing the size of the loan.
For those people who have lost their job - it is a different story - but anyone who has kept their job has been better off in terms of mortgage payments for the past two and a half years.

It will probably be another couple of years before the ECB rate rises back up to 4% again (if it ever does).

History of ECB Rates Since 2003

EBS got €525 million of state money last week but in the same week they put up most of their mortgage rates for new customers.
The 3 , 5 and 10 year fixed rate mortgages and the EBS Variable “LTV” rates all went up - by varying amounts.
The 3 year fixed rate rose from 3.99% to 4.04% while the 5 Year fixed rate went from 4.5% to 4.64%. Variable rates went up by .04% to 0.09%

See Lowest Mortgage Rates Here

A few Irish banks have increased rates on variable mortgages in the past few weeks.
EBS and PTSB were quickly followed by AIB and BOI and ICS - with KBC also announcing smaller increases yesterday.
Tracker mortgage rates are not affected by these rises.
ECB rates remain at 1% - but banks are increasing rates because the cost of their borrowing is more than the ECB rate.
For new customers - switchers , movers and first time buyers - check out the best mortgage rates on Money Guide Ireland

EBS Building Society have announced that it is to increase it’s Standard Variable Mortgage Rate by 0.60% (60bps) from 3.23% to 3.83% ) from 1st of August 2010.
The ECB rate remained at just 1% this week - but this is the second increase from EBS in 2010

Lat week - the ECB kept rates at the all time low of 1%. There is very little sign of any ECB rate rise in 2010 now. Some variable mortgage rates in Ireland have risen during the period of unchanged ECB rates - but borrowers on trackers are doing well - with repayments at the lowest they will ever be for many homeowners.