For a while we have seen competition starting to heat up a little in the mortgage market. Several moves recently have started to demonstrate this further, Bank of Ireland have their ‘pay you to borrow from us’ campaign, KBC had a ‘pay you to switch’ along with rates that beat everybody else.
Now they (KBC) have launched a quick approval process which aims to cut down the time it takes to get approved which at it’s worst was taking up to four weeks with some banks. This is only for an approval in principle, which isn’t worth much (not like a loan offer is) but it is the first step in the mortgage process in terms of getting meaningful feedback from a lender.
They have a first time buyer 1yr fixed rate of 3.5%, short term fixed rates are where banks tend to go to attract business as the first year costs are what many buyers are fixated on rightly or wrongly.
There is one bank rumoured to be considering a return to brokerage, another who shut operations considering re-opening and then the defunct ICS (now Dilosk) who are set to return in Q4, all of these things mark a confidence and return to credit that will take until well int0 2015 to play out, but suffice to say, it appears the credit cycle may at last be starting to turn.
Thanks Karl for the very helpful response.
Would the following be a correct observation: When the ECB reduces it rates, then mortgage variable rates normally are reduced, however when the ECB increases its rates, then mortgage variable rates increase?
I visited two of the major banks. They seem to call themselves “pillar banks” and claim (or at least try to give an impression) that they are less risky and are safer to bank with. They seem to disregard KBC a little since they are not physically located in Ireland. One employee claimed that if you are having problems repaying, then it might be difficult to do business since they do not physically have office space here. They also say that the offers being made by some non pillar banks are only for the coming years, and it is not clear what would happen in the future. The impression given is that they may raise their variable rates considerably. Is this just another scare tactic or do they have a point?