Avant Money, one of the cheapest mortgage providers in the Irish market, has become the second lender this year to increase some of its rates. Will others follow?
It seems like the period of ultra-cheap mortgage rates may finally be coming to an end.
Back in February ICS mortgages increased some of its mortgage rates. And now Avant Money, the low-cost Spanish lender which has shaken up the Irish mortgage market since it launched here in 2020, has followed suit.
It's increasing its five, seven and 10-year fixed rates for new borrowers by between 0.20% and 0.30% from 13th May for new customers.
However it’s also reducing some of its longer-term fixed rates, while its three and four-year fixed rates, which start from as low as 1.95%, remain the same for now.
Here’s all you need to know.
Going up
Avant is increasing its five, seven and 10-year rates by up to 0.30%.
Among the changes, its popular five-year fixed rate for first-time buyers with a 10% deposit is increasing by 0.20% to 2.40% while its 10-year rate will increase by 0.30% to 2.70%.
Like most lenders Avant offers different rates depending on the size of your deposit if you’re a first-time buyer, or the amount of equity you have in your home if you’re a switcher, referred to as the loan-to-value (LTV) ratio. You can see all Avant's new rates across all LTVs up to 10 years in the table below.
|
Fixed Rate |
60% LTV |
70% LTV |
80% LTV |
90% LTV |
|
3-year |
1.95% |
2.05% |
2.15% |
2.20% |
|
4-year |
1.95% |
2.05% |
2.15% |
2.15% |
|
5-year |
2.15% 1.95% |
2.25% 2.05% |
2.35% 2.15% |
2.40% 2.20% |
|
7-year |
2.25% 1.95% |
2.35% 2.05% |
2.45% 2.15% |
2.55% 2.25% |
|
10-year |
2.40% 2.10% |
2.50% 2.20% |
2.60% 2.30% |
2.70% 2.40% |
Going down
In better news, Avant has reduced its 25 and 30-year fixed rates by up to 0.35%.
Not so long ago, the longest fixed rate on offer in Ireland was for 10 years. But now you can fix your mortgage rate for your entire term if you wish - as is common in the rest of Europe.
With Avant its 25 and 30-year fixed rates start from just 2.50%, which is super competitive.
So if you’re looking for peace of mind and certainty with your mortgage payments in a time of rising rates, it might be a good idea to look at fixing your rate over the longer term now while rates are still close to record lows. However there are cons as well as pros to fixing your mortgage, which you can read about here.
|
Fixed Rate |
60% LTV |
70% LTV |
80% LTV |
90% LTV |
|
25-year |
2.50% 2.65% |
2.65% 2.80% |
2.75% 2.90% |
2.95% 2.99% |
|
30-year |
2.50% 2.85% |
2.65% 2.99% |
2.75% 3.10% |
2.95% 3.10% |
What if I'm in the process of applying for a mortgage with Avant?
If you've already submitted a mortgage application in full to Avant, you can still avail of the old rates if you fully draw down your mortgage before 15th July.
Any mortgage drawn down after this date will be subject to the new, higher rates.
Why are interest rates increasing?
Inflation.
At 7.5%, eurozone inflation is rising at its fastest pace since the creation of the euro over two decades ago. In some countries, including Ireland, prices are rising at their fastest pace since the early 1980s.
See here for an explanation on why inflation is increasing.
Although the ECB has yet to raise rates, it’s expected to do so over the coming months to try to bring inflation under control (which we discuss in more detail here).
This expectation of an increase in rates is raising the cost of funds on global money markets, which in turn is putting pressure on some lenders such as Avant Money and ICS Mortgages, which rely heavily on these markets for funding, to hike their rates.
The retail banks – AIB, BOI, and PTSB - are part able to fund their mortgages through their vast deposit books so are less exposed to rising costs on capital markets for now. Indeed both BOI and PTSB recently reduced some of their rates. So it’s a bit of a mixed picture. BOI recently launched a new 1.90% green fixed rate for example - the lowest in the market.
But with eurozone inflation currently running at almost four times the ECB target of 2%, the ECB will have to raise rates soon. When this happens it will affect those on trackers or variable rates almost immediately across all lenders while new customers signing up to fixed rates will face higher costs.
For someone with €200,00 remaining on their tracker mortgage over 20 years – currently paying a margin of 1% - they’re looking at an increase in repayments of around €45 a month if the ECB raises rates by 0.50%.
If you’re an average first-time buyer borrowing €250,000 over 30 years at the average rate of 2.76% - a 0.50% increase would add around €70 a month to your repayments (if you’re on a variable rate).
Compare mortgage rates on bonkers.ie
Remember, whether you're a first-time buyer, moving home, or looking to switch your mortgage to save some money, you compare mortgage interest rates and incentives across all lenders in Ireland in just seconds with our mortgage calculator.
Better still, when you find the right mortgage for you, you’ll be able to complete your mortgage journey with us through our mortgage broker service.
Our mortgage broker service is fully digital and paper-free meaning you can do it all online from the comfort of your home.
Get in touch
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Would you consider locking into a longer-term fixed rate?
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