The BANK of Ireland is raising interest rates on its fixed-rate mortgages for new customers.
Fixed interest rates are expected to rise by 0.25 percentage points.
That’s half the increase in fixed rates announced by competitor AIB.
The Bank of Ireland’s new interest rates apply immediately to new borrowers and those switching.
This means the bank’s top rate of 1.9 percent for those borrowing more than €400,000 without repayment increases from 1.9 percent to 2.15 percent for new borrowers and bills of exchange.
But the new rates will have no impact on existing BoI clients hitting the end of a fixed rate. You can still hold on to the rates that were in effect before the last raise.
There is no increase in variable interest.
Trackers customers automatically face higher interest rates, matching the three record hikes announced by the European Central Bank (ECB) in the last four months.
The BoI move comes after the AIB hiked its fixed rates by 0.5 percent in recent weeks.
The Bank of Ireland will allow those who already have a new mortgage approval to receive the previous rates provided they pull by December 9.
This move, giving four weeks’ notice to those in the process of obtaining or switching to a new mortgage, is consistent with what AIB has been doing.
It comes after Finance Ireland was heavily criticized for originally announcing a rate hike that impacted those just about to get a mortgage.
Bank of Ireland customers with existing fixed rates are not affected by the new announcement.
And KBC Bank Ireland customers who switch their mortgages to Bank of Ireland will keep the existing terms of their mortgages.
Financial experts were surprised by the reluctance of three private lenders, AIB, Bank of Ireland and Permanent TSB, to announce higher and broader rate hikes.
Especially since the three ECB hikes have lowered the main refinancing rate from 0 to 2 percent since the summer.
Non-bank lender ICS has announced several rate hikes and severely curtailed its new lending.
Finance Ireland has announced large increases in its interest rates and suspended its long-term interest rates of 10 years or more just a year after their introduction.
Avant Money has also increased its prices.
The big three banks have been far more cautious, however, as they benefit enormously from having massive amounts of household and corporate savings on their books.
The ECB now pays 1.5 percent for bank money deposited with it, leading to calculations that the three banks paid $1 billion.
The pressure will now be on Permanent TSB to also hold back on increasing its variable interest rates and to keep any increases in new fixed interest rates to a minimum.
This week’s figures show that mortgage rates in this market have fallen to their lowest levels in years.
This has resulted in people with expensive variables being warned not to grab their last opportunity to get a cheaper fixed rate.
Home loan rates in that country are now the eighth lowest in the euro zone, having been the highest just a few months ago.
This is in contrast to the rest of the eurozone, where interest rates have risen dramatically over the past six months.
Central Bank of Ireland figures show that the average interest rate on new mortgages in the country was 2.58 per cent in September. This is down from 2.64 percent in August.
The eurozone average is 2.40 percent, the highest since at least August 2017 and more than double the level this time last year.
Ireland was also the only country whose September average rate fell compared to the previous month.
https://www.independent.ie/business/personal-finance/property-mortgages/bank-of-ireland-to-increase-its-mortgage-rates-42133660.html The Bank of Ireland plans to raise mortgage rates