Q I’ve heard switching my tracker mortgage to either a long-term fixed rate or to a new provider might increase my chances of getting a better interest rate on my mortgage. Is it advisable to switch to a fixed rate now?

A Unfortunately, there is no simple answer to this question and queries such as this should be dealt with on a case-by-case basis. I encourage you to contact a financial broker to discuss switching. This will ensure that due consideration can be paid your individual situation, including your existing mortgage, its balance, term and interest rate, along with some pertinent information on yourself.

However, in relation to the broader query regarding switching, some things are worth considering.

While Ireland continues to retain some of the cheapest mortgage rates in the Eurozone, mortgage rates have been rising. Borrowers in just two other Eurozone countries, Malta and Latvia, can avail of lower-cost loans. This is largely due to Irish lenders holding off passing down European Central Bank (ECB) rate increases by not increasing variable and some fixed rates.


However, this situation is likely to change, as the recent ECB interest rate hikes are passed on to Irish borrowers, meaning someone applying for a mortgage today will be faced with much higher rate options than someone who applied six months ago. Currently, the average rate for a new mortgage is heading for 3.5 per cent and financial forecasts don’t look great for those on trackers, variable rates or those looking to buy over the coming months.

While there are still some good-value rates to be found, normally ‘green rates’, to avail of these rates you must buy a property with a BER of at least ‘B’.

The overall impact of the successive ECB interest rate hikes continues to push mortgage rates higher, with at least one and possibly two more increases expected this year. It’s been warned, with rates rising this fast, the cheapest mortgage on the Irish market by the end of 2023 will possibly be more than double what it was in the middle of last year.

The ECB is almost guaranteed to hike rates by another half percentage point when it meets again in March, and by another quarter percentage point before the end of summer. This will take the main ECB lending rate to 3.75 per cent and will guarantee yet more rate increases from all the lenders. Consequently, by the end of 2023, the cheapest rate is likely to be over 5 per cent.

Rachel McGovern, Director of Financial Services, Brokers Ireland, said “for the foreseeable future, given the unequivocal messages coming from the European Central Bank, the only way is up in terms of interest rates. The organisation has made it quite clear it is not going to stop at a further interest rate rise next month. And the only factor that could potentially change that, is if we were to see something of a dramatic drop in inflation – and it’s difficult to see that right now.”

Recent data accrued from the Central Bank, as well as Brokers Ireland, has found consumers are perhaps wisely opting to lock into fixed interest rate mortgages for longer periods, with 92 per cent of new mortgage applicants opting for fixed rates.

If you want to find out more about your rate options, contact a Mortgage Broker as soon as possible.

This article aims to give information, not advice. Always do your own research and/or seek out advice from a Financial Broker before acting on anything contained in this article.

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