Brokers want eight-week period for house hunters to draw down mortgages

Warning that tight deadlines before rates go up will jeopardise mortgage approval and house sales.

Following interest rate rises by the ECB Ireland's lenders are expected to announce a series of mortgage rate increases.

Mortgage lenders are being asked to give potential homeowners up to eight weeks' notice to allow them draw down their mortgage before rate increases come into effect.

The European Central Bank (ECB) has raised rates twice already by 0.5% in July and 0.75% in September with a third increase to be announced later this month. So far Ireland's largest mortgage lenders, Bank of Ireland, AIB and Permanent TSB have yet to increase their rates but are expected to do so in the coming weeks and months. Smaller lenders have already announced new higher fixed and variable rates.

The Association of Irish Mortgage Advisors (AIMA) which represents mortgage brokers in Ireland said the notice periods applied by lenders on new higher rate offers are too restrictive and will jeopardise mortgage approval and house sales. 

Last week, Ireland's largest non-bank mortgage lender, Finance Ireland announced rate increases across their full range of mortgage products, but house hunters who were approved in principle were given just days to proceed to drawn down stage and secure the original lower rates.

"Moves by lenders of late to introduce rate increases are expected and understandable – but what is not expected are very narrow timeframes offered to consumers who are in the throes of the property purchase process and mortgage switching, to avail of the lower rates – which were originally offered," Trevor Grant of the AIMA said.

AIMA is advocating for a consistent notice period of eight weeks to complete the mortgage drawdown, for those applicants that are already approved for their mortgage.

"This situation could potentially be disastrous for the people affected," Grant said. "Mortgages invariably take months from first application to closing. However, thousands of people who are well advanced in the process are now being asked to close within a very short timeframe that is for most simply not possible."

"If an applicant has fully submitted all of the information required and has secured mortgage approval, they should be given a period of eight weeks, to close out their mortgage at the rate applicable at the time of submission."