Bank of Ireland recently announced new and reduced mortgage rates, which will be available starting Friday the 16th. The highlight is cuts of fixed mortgages rates up to 0.35% for both existing customers and for first-time buyers. The bank decision ups its competition in Ireland’s reviving property market and marks Bank of Ireland as the fourth lender that has cut its rates within the last two months. KBC Bank cut its fixed rate in April, and currently has one of the lowest rates on the market. Permanent TSB and Ulster Bank are the other two lenders who have also taken similar measures.
Bank of Ireland’s fixed rate mortgages are based on a property’s loan to value ratio. It has cut its rates for first time buyers with an Loan to Value ratio of 81-90% by 0.25%. Customers with greater down payments and lower Loan to Values ratios also see their mortgage rates cut between 0.1%-0.25%. The greatest reductions however have been for Bank of Ireland’s existing customers, who see their mortgage rates fall by 0.35% if they have a Loan to Value ratio between 81%-90% and by 3.25% if they have a Loan to Value ratio between 81%-90%. Overall, those with greater down payments, lower Loan to Value rations and existing customers are the ones who can benefit the most from this decision.
The cut in fixed rate mortgages also reflect a greater desire for certainty and lower tolerance of risk in the Irish housing market. A recent report from the Central Bank stated that more than half of new mortgages are now have fixed instead of flexible rates. For Bank of Ireland, the figure is even higher with almost 7 in 10 mortgages in the past six months having fixed rates. Fixed rate mortgages provide stability in a changing environment and protect customers from rising interest rates, however, it also locks customers into a contract with a single lender.
John O’Beirne, Head of Mortgages at Bank of Ireland said that the bank’s “fixed rate options include a number of flexible features […] allowing customers to choose a mix of fixed and variable rates to balance flexibility with certainty”. At Bank of Ireland, customers also are able to carry their fixed rate to anew mortgage when they move to a new home.
The overall lower mortgage rates in the market signal the heating up of competition between mortgage lenders, which reflects greater demand for housing on the part of customers.