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‘Get a home loan fast’ as interest rates set to rise, experts say

Housing hunters have been urged to get a mortgage quickly as interest rates are expected to rise.

Experts have warned costs could rise after ICS Mortgages became the first provider to raise fixed rates.

The lender has announced a rate increase on all of its fixed mortgage offerings with immediate effect. The rate increases are the result of the increased cost of funding from the capital markets on which ICS depends to fund its loans.

Housing hunters have been urged to get a mortgage quickly as interest rates are expected to rise. Photo: Shutterstock

Martina Hennessy, Head of Mortgage Advisors Doddl.ie, said: “After experiencing declining mortgage rates for several years, the rise in ICS Mortgages reminds us that we are in a low rate environment, with mortgage rates the further down they ‘it’s been over 12 years.’

ICS’ decision to break ranks on rates could prompt other lenders to follow suit.

Ms Hennessy explained: “The upward pressure on funding costs could lead to rate hikes by other lenders in the not too distant future.

Experts have warned costs could rise after ICS Mortgages became the first provider to raise fixed rates. Photo: Shutterstock

“These rate increases, while untimely, reflect the volatility in global capital markets on which ICS, as a non-bank lender, depends for its funding. The current low rate environment, along with rising home values, provides an opportunity for mortgage holders to lock in lower rates and hedge against the rising cost of living.

She also said that “98% of Doddl.ie customers are fixing their mortgage, with fixed rates currently lower than variable rates”, adding: “Buyers appreciate the repayment security that fixed rates offer, and changers tend to have a solid loan. to value, which locks in some of the very low fixed rates in the market, which start at 1.95%. »

David Hall of the Irish Mortgage Holders Organisation, which campaigns for fair rates, advised people to “get a mortgage fast”.

The lender has announced a rate increase on all of its fixed mortgage offerings with immediate effect. Photo: Shutterstock

But acknowledging the scarcity of supply, Mr Hall added: ‘They also need to get a house. That’s the problem unfortunately. Mortgages aren’t transferred – they’re assigned to a property and people can’t find properties, so it’s an absolute disaster.

“The problem at the moment is that we don’t know when rates will go up.” People are expecting this to happen, but no one knows if it will definitely happen.

He said the general sentiment was that inflationary pressure would suggest a rate hike, but political pressure from the war in Ukraine meant the European Central Bank (ECB) was holding back.

“All of this is far from ideal, but the key is to make sure you get proper advice and don’t jump into something,” he said. “These are uncharted waters where there is a live war.

The rate increases are the result of the increased cost of funding from the capital markets on which ICS depends to fund its loans. Photo: Shutterstock

“It’s bad enough trying to buy a house in a housing war without getting involved in a real war.”

He believes the ECB will hold off on a rate hike, but said if inflation takes hold it will cause “significant” economic problems.

Mr Hall added: ‘There is no good news in this, it is the reality. There is simply no good news. So I think you have to be careful and make sure that you can also pay if interest rates go up.

The ECB’s base rate is currently at 0% after cutting rates following the financial crash more than a decade ago.

Ms Hennessy said ICS remains competitive even after the rate increase.

“ICS still remains competitive with some anchor banks, with three-year fixed rates ranging from 2.25% to 2.55% and five-year fixed rates from 2.4% to 2.69%. Anchor banks offer these rates up to 3%,” she explained.

She said the average first-time buyer’s mortgage over the past three months was €247,790, so the increase in ICS would lead to a €26 per month increase in mortgage repayments.

The difference between the highest rate and the lowest rate on the market is now 2.55 points, which represents a potential saving of €135 per month for €100,000 reimbursed over a period of 25 years.

Doddl says it’s important to note, when choosing a mortgage rate, that the rate you qualify for is the rate on the draw date.

However, ICS, which specializes in home loans for public sector employees, noted that its lower pre-increase rates still apply on all loan offers.


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