Over the past two years, homeowners with fixed rate mortgages enjoyed stability amidst the European Central Bank's aggressive interest rate increases. Fixed rate mortgage holders had average interest rates of between 2.75% and 2.95% which compare favourably to the average mortgage rate of between 4% and 6% in the market at the end of 2023. This enviable position will soon come to an end as approximately 140,000 mortgage holders will see their fixed rates expire by the end of 2024 and face increases in their monthly repayments.

Impact of Rate Changes on Your Monthly Repayments

To demonstrate the significance of the potential increases you may face when your fixed rate expires, consider the following example. Take a homeowner with a €250,000 mortgage over 30 years. At a fixed interest rate of 2.95%, their monthly repayment is €1,047.28. However, if they roll over onto a rate of 4.19%, this repayment increases to €1,221.08. Some lenders offer variable rates of up to 6.09% which could mean monthly repayments increasing from €997 to €1,513.

It is inevitable that if you're coming off a fixed rate, you will bear an increase in your monthly repayments but you do have the power to ensure that the new rate you pay is the best rate available to you.

Your Fixed Rate is Ending - Next Steps

When the end of your fixed rate is approaching, your lender must give you at least 60 days' notice thereof and provide you with details of the new variable rate you will automatically be on. They will also outline the current fixed rate options they have available. Although this information is helpful, it is unfortunately limited to what the lender has to offer and does not give you a full view of the options available in the entire market. The 60-day period is also not enough time if you are considering switching your mortgage to another lender.

Preparing for the End of Your Fixed Rate

The best approach is for you to be proactive. Find out from your lender exactly when your fixed rate is expiring and find out how much you still owe on your mortgage; how many years are remaining; and what rate they are currently offering their existing customers. Once you have this information, contact a mortgage broker to assist you in surveying the market to determine the best rate available to you. At Which Mortgage, we have access to all lenders in the market, which enables us to consider all rates available to you and help you find the mortgage that is best suited to you.

Where we determine that your current lender does not offer the best value and another lender does, then it may be best to switch your mortgage. Many lenders have removed the perceived barriers to switching a mortgage by reducing the number of documents required for a switch and offering switching incentives that you could put towards paying for the costs associated with switching your mortgage.

While it is unlikely that you will be able to avoid a higher interest rate when you come off your fixed rate, being proactive is the best way to soften the blow. Find out when your fixed rate expires and contact us to explore the market to find the best available rate to you.