The latest hike will add around €75 to the average first-time buyer mortgage repayment.
Bank of Ireland (BOI) has hiked its mortgage rates for the second time this year. However the hike was less than expected.
All its fixed rates for new customers are going up by 0.50 percentage points from today.
Its fixed rates for existing customers will also go up by 0.50 percentage points (these are customers who are coming to the end of their current fixed-rate period and are seeking to re-fix, and tracker or variable rate customers who want to move to a fixed rate).
BOI has kept its variable rates unchanged for now – though these were already very high to begin with.
Bank of Ireland's new fixed rates
Here's a look at BOI's new fixed rates for first-time buyers, as well as existing customers.
As outlined below, BOI offers a 0.50 percentage point discount across all its fixed rates for those who buy a property with a BER of B3 or better i.e. a green rate.
The lowest rate on offer from BOI will now be 3.40% (compared to 2.90% previously) and just 1.90% up until November.
|
BOI fixed rates new customers* |
Previous rates |
New rates |
|||
|
Standard rates |
Green rates |
Standard rates |
Green rates |
||
|
1 year |
3.90% |
3.60% |
4.40% |
4.10% |
|
|
2 years |
3.90% |
3.60% |
4.40% |
4.10% |
|
|
3 years |
4.00% |
3.70% |
4.50% |
4.20% |
|
|
5 years |
4.00% |
3.70% |
4.50% |
4.20% |
|
|
10 year LTV <80% |
4.30% |
4.00% |
4.80% |
4.50% |
|
|
10 year LTV >80% |
4.50% |
4.20% |
5.00% |
4.70% |
|
|
High value rates** |
|||||
|
4 years |
3.20% |
2.90% |
3.70% |
3.40% |
|
|
5 years |
3.50% |
3.20% |
4.00% |
3.70% |
|
|
7 years |
3.55% |
3.25% |
4.05% |
3.75% |
|
*with up to 3% cashback
**for loan amounts >€250,000 and no cashback
|
BOI fixed rates existing customers |
Previous rates |
New rates |
|
1 year |
3.40% |
3.90% |
|
2 year |
3.40% |
3.90% |
|
3 year |
3.50% |
4.00% |
|
5 year |
3.50% |
4.00% |
|
10 year LTV <80% |
3.80% |
4.20% |
|
10 year LTV >80% |
4.00% |
4.50% |
Why the increase?
Since last July the European Central Bank (ECB) has hiked rates from 0% to 3.50%. But until today BOI had only hiked its fixed rates by one percentage point in total. So even after today’s move, BOI has passed on less than half the ECB rate increase.
BOIs main rivals, AIB and PTSB have pushed through much bigger increases.
However this 'generosity' to mortgage holders has largely come at the expense of savers. BOI hasn't announced a hike in its savings rates for personal customers today and these remain at close to zero.
Unfortunately, the ECB is expected to hike rates again over the summer, perhaps by another 0.50 percentage points to 4%. As a result, further rate increases from BOI and all the other lenders are almost guaranteed over the coming weeks.
At the moment the cheapest rate in the entire market is a variable rate of 2.75% from Haven (though you need a 50% deposit). By the end of the year, the cheapest rate on offer is likely to be well over 4%.
Cost
Today’s move will cost the average first-time buyer (someone borrowing €270,000 over 30 years) around €75 extra a month in repayments. So it’s not an insignificant amount.
However, people in the process of applying for a mortgage with BOI and who have credit approval have until 5th May to avail of the old rates. Though one would have hoped a slightly longer time frame could have been given.
Higher rates are likely to significantly cool the property market. Indeed prices have fallen by 1.60% in Dublin over the past three months according to the CSO. However, to maintain affordability, prices would need to fall significantly (by up to 30% or more) to fully compensate for a 3.50 percentage point rise in interest rates – presuming the full ECB hikes are eventually passed on.
We discuss the potential impact of rising rates on property prices in this in-depth article here.
Deposit rates on the up
In slightly better news, BIO is launching a new one-year fixed-term deposit account offering 0.50% interest for customers with balances up to €100,000.
And it's hiking its regular savings rate from 0.25% to 0.75%.
Nevertheless, these are still pretty paltry returns given inflation is still running at over 8%...
You can find out which financial institution offers the best value savings accounts in Ireland here.
Compare mortgage rates on bonkers.ie
Whether you’re a first-time buyer or looking to switch to a fixed rate, on bonkers.ie you can compare the different interest rates on the market with our free comparison service.
Here you can compare interest rates, incentives and cashback offers from Ireland’s main lenders.
When it’s time to apply for or switch your mortgage, you can submit an online enquiry through our mortgage broker service and one of our experienced financial advisors will call you back to get your application started.
Check out our other mortgage articles
If you would like to learn more about the mortgage application process, take a look at our other related articles.
- Learn how to compare mortgages on bonkers.ie in this guide.
- More people are opting for fixed rates over variable rates, however, it’s important to understand the pros and cons of both.
- If you’re considering making energy-efficient improvements to your home, you could be eligible for a green mortgage.
Keep up to date with the latest mortgage news and tips with our blogs and guides pages.
Get in touch
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