The non-bank lender is increasing its fixed rates for the third time this year with rates going up by 0.50%.
With the cost of living on the rise and gas and electricity bills at record levels, the last thing households want to have to contend with is rapidly rising mortgage costs. However that's what households are facing over the coming months as interest rates start to rise.
Non-bank lender ICS is increasing its fixed mortgage rates once again, which will add over €100 to the average mortgage repayment.
Going up
ICS is increasing its three and five-year fixed rates by another 0.50% across all loan-to-value (LTV) bands.
It's the third time it's raised its fixed rates this year after hikes in March and May.
First-time buyers with a 10% deposit who want to avail of ICS’s five-year fixed rate will now pay a rate of 4.19% as opposed to 3.69% previously, and just 2.50% back in March!
This means a first time-buyer borrowing €250,000 over 30 years will now pay €1,210 a month compared to €1,140 a month previously. At the start of the year they would have been paying just €984 a month.
Movers or those with a 20% deposit will now pay €1,197 a month compared to €1,128 a month previously. Before March's hike, they would have been paying just €946 a month - that's a difference of €251 a month!
Switchers with at least 40% equity in their homes who could have availed of a five-year fixed rate as low a 1.95% back in March will now pay 3.90%.
However, all ICS’s variable rates, which it increased by 1.25% recently, are remaining unchanged for now.
|
Loan-to-Value |
Variable |
3-year fixed |
5-year fixed |
|
< 60%
|
3.70% 2.45%
|
3.75% 3.25% 2.25% 1.95%
|
3.90% 3.40% 2.40% 1.95%
|
|
< 70%
|
3.70% 2.45%
|
3.80% 3.30% 2.30% 2.10%
|
3.95% 3.45% 2.45% 2.10%
|
|
< 80%
|
3.95% 2.70%
|
3.95% 3.45% 2.45% 2.20%
|
4.10% 3.60% 2.60% 2.20%
|
|
< 90%
|
3.95% 2.70%
|
4.05% 3.55% 2.55% 2.35%
|
4.19% 3.69% 2.69% 2.50%
|
When will the new rates take affect?
The new rates are effective from 1st October.
Existing fixed-rate customers won't see their rates change of course. However once they come to the end of their fixed-rate period they'll be faced with much higher rates.
Back in August ICS announced a string of temporary changes to its mortgage lending policy which will make it much more difficult for first-time buyers and switchers to qualify for a mortgage with the lender. This coupled with today's rate increase, which makes ICS among the most expensive lenders, effectively closes ICS for new business for now.
Why are interest rates increasing?
Inflation.
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.
To combat inflation the ECB has raised rates by 1.25% over the past few weeks to try to bring inflation under control and the official rate is expected to hit around 3% next year. This would mean the cheapest mortgage rate on offer from banks would likely be 4%.
This expectation of a further increase in rates is raising the cost of funds on global money markets, which in turn is putting pressure on non-bank lenders such as Avant Money and ICS Mortgages, which rely heavily on these markets for funding, to hike their rates.
The main 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. Neither of these lenders have increased their rates in response to the ECB hikes for now.
However when the ECB next meets at the end of October it’s likely it will raise rates again by at least 0.50% to 1.75%. It’s at this stage the banks are likely to review their rates.
Compare mortgage rates on bonkers.ie
While rates have been increasing with some lenders, other lenders such as Bank of Ireland and Permanent TSB have kept theirs steady. For example, BOI still has its green, high-value mortgage rate of just 1.90%.
So whether you're a first-time buyer, moving home, or looking to switch your mortgage to save some money, 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.
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