A “rate war” is heating up as Bank of Ireland has become the latest bank to cut its mortgage rates.
Just days after AIB announced a cut to its standard variable rate, Bank of Ireland’s announcement now means borrowers can fix their mortgage rate at 3% for one, two or five years, regardless of their loan-to-value ratio.
The bank’s one-year fixed rate for first-time buyers has fallen from 3.35% to 3%. This means that, for example, a prospective buyer with loan to value of 90% borrowing €270,000 over 30 years will pay €50 less per month.
The interest rate for the bank’s 10-year fixed product has also been reduced to 3.3% for loans up to 80% of the property value and to 3.5% for loans above 80% loan to value.
Bank of Ireland’s announcement comes just days after AIB cut its standard variable rate to 3.15%. However, there has been a flurry of further cuts announced by other financial institutions in the last few months.
In the past six weeks alone, Haven has cut its standard variable rate, EBS has cut a range of fixed mortgage rates and KBC has introduced a new 10-year fixed rate mortgage product.
Head of communications with price comparison site Bonkers.ie, Mark Whelan, said this latest move by Bank of Ireland will be welcomed by mortgage holders across the country.
“Bank of Ireland’s mortgage rate cuts are good news for Irish borrowers, who have been paying more than their European counterparts for some time.
"Bank of Ireland’s fixed rates will be among the most competitive in the Irish market and are likely to be popular among borrowers who favour peace of mind and certainty over their mortgage repayments,” he said.
Mr Whelan also said that, with a succession of cuts coming in recent weeks, the announcement may be another shot in an emerging mortgage rate war.
“There have now been four mortgage rate cuts announced since late September, meaning that there is finally some healthy competition entering the Irish mortgage market, which is good news for borrowers.
"All eyes will now be on other banks to see how they react to the emerging mortgage rate war,” he said.
© Irish Examiner Ltd. All rights reserved