Mortgage rate cuts by Bank of Ireland in its very short-term loans as well as rises in its very long-term rates have surprised brokers who say the changes will not shake up the market.
The bank said it cut its rates for one- and two-year loans by 0.1% to 2.9% and had increased both of its 10-year rates, by 0.2%, to 3.5% or 3.7%, depending on the size of the loan.
Mortgage broker Michael Dowling said he was “a bit surprised” by the move to increase the 10-year fixed rates because the lender has been competitive in long fixed-rate loans.
Potential borrowers shouldn’t be enticed into buying fixed-rate loans over one or two years, he said. He said anyone fixing for one or two years was getting bad advice because they would come off those rates at a time when the ECB would likely be moving rates higher.
Financial markets assume that after a delay caused by the slowdown in growth in the eurozone, that the ECB will nonetheless raise its key rates sometime next year.
Daragh Cassidy at bonkers.ie said the cuts in the one- and two-year rates would save a first-time borrower paying a loan of €225,000 over 30 years around €12 a month.
“However, those who have a 10% deposit and choose the 10-year fixed rate will be €25.29 worse off a month or almost €3,035 over the course of the 10 years,” he said.
Bank of Ireland said it has left its three-year rate unchanged at 3%. The lender said the rate cuts would keep it competitive and “together with the availability of the 3% cashback offer until December 2019, reflect this,” said its head of mortgages, Brian Vaughan.