Focus on 'limited choice' in Irish fixed-rate mortgages as ECB debates rate hikes

Only two lenders offer a full range of fixed rates for 15 years or more at rates of below 3%

Traders are betting that the ECB will be forced to end its eight years of negative interest rates, sending the euro higher.

Irish mortgage holders face "a limited choice" to tap into real long-term fixed rates and prepare for likely interest rate hikes by the ECB this year, senior mortgage broker Michael Dowling has said. 

Only two lenders, Finance Ireland and Avant Money, offer a full range of fixed rates for 15 years or more at rates of below 3%, while the main banks continue to offer fixed-rate home loans of much shorter periods, Mr Dowling said.

"People are aware that rates are going up and that now is a time to negotiate a long-term fixed rate or to switch," he said. 

The remarks come after the ECB has no longer ruled out following other central banks to hike interest rates to combat global inflation. 

Goldman Sachs said it expects seven quarter-point interest rate rises from the US Federal Reserve this year, up from its previous forecast of five and updating its forecast after Thursday's US inflation data.

US consumer prices surged 7.5% last month and marking the biggest annual increase in inflation there in 40 years, further adding to pressure on the Fed to raise rates more aggressively.

HSBC's US economist Ryan Wang said the bank now expects the Fed to front-load rate rises more than previously anticipated, with a 50 basis point hike in March and four additional quarter-point rate rises in 2022.

Traders are betting that the ECB will be forced to end its eight years of negative interest rates, sending the euro higher.

ECB policymakers, including president Christine Lagarde, have since struck a more dovish tone. But many traders believe the shift in thinking is evident and markets must catch up with an ECB finally ready to tighten — even if not as fast as rivals. 

"Anybody expecting the ECB to completely undo the hawkish policy shift that Ms Lagarde delivered at last week’s meeting will have been disappointed by this week’s numerous policy statements," said Andrew Kenningham, chief Europe economist at Capital Economics.

"Admittedly, Ms Lagarde herself adopted a more balanced tone with EU parliamentarians and told the media that the ECB was planning to 'shift down the gears in stages' rather than perform a handbrake turn," he said.