Anticipation is growing around the possibility of the European Central Bank (ECB) cutting official rates as early as March 2024. For approximately 70,000 households in Ireland, whose fixed mortgage rates expire in 2024, this could mean experiencing lower interest rate hikes than initially expected.

A recent shift in market dynamics, influenced by inflation figures and financial market expectations, is steering the course of interest rates, impacting Irish mortgage holders.

Impact on Irish Mortgage Holders

If you’re an Irish homeowner with a fixed-rate mortgage approaching its ends, the prospect of increased mortgage rates may have loomed large. However, there’s a silver lining. The cost of wholesale funds used by banks is decreasing and banks might pass on these cost savings to mortgage holders even before any rate cuts are made at ECB level. Previously, those with fixed-rate mortgages faced significant hikes of 2% to 2.5% due to aggressive interest rate increases by the ECB since July of the preceding year.

Current Changes in the Market – PTSB Mortgage Rate Adjustment

In a noteworthy development, PTSB becomes the second lender to cut a mortgage rate since the series of interest rate hikes by the ECB.

The bank is reducing its 4-year fixed-term mortgage rate by 0.4%, effective from 6 December 2023. This reduction comes after Avant Money decided to decrease their 10-year fixed rates and all ‘One Mortgage’ products by 0.35% in May this year.

PTSB’s move brings the 4-year fixed rate to:

·         4% for loan -to-value ratios below 60%

·         4.1% for loan-to-value ratios from 60% to 80%

·         4.35% for loan-to-value ratios above 80%.

PTSB stated that there are no increases in their fixed rates for new or existing customers, which account for approximately 95% of their new business.

Is your Fixed-Rate Expiring Soon?

For mortgage holders nearing the end of their fixed rates in the next year, prompt action is crucial. Begin by contacting your lender to determine the expiration date of your fixed rate. Approximately three months before this date, explore the available market rates and consult with a mortgage broker to navigate any potential challenges and avoid any delays.

Taking proactive steps to prepare for your switch ahead of time ensures a smooth transition and prevents you from automatically rolling onto an expensive variable rate with your existing lender – which is what usually happens if you do not switch your mortgage before your fixed rate ends.

In the evolving landscape of interest rates with the prospect of ECB rate cuts and recent adjustments by lenders like PTSB, strategic planning becomes imperative.

By staying informed, acting in advance, and considering available options, homeowners can navigate these changes, potentially securing more favourable terms for their mortgages. As the financial landscape continues to shift, proactive decision-making remains the key to financial well-being.