Other lenders may be ready to raise mortgage interest rates, expert says

Mortgage interest rates could rise after ICS became the first provider to raise fixed rates, an expert says.

ICS Mortgages has announced a rate increase on all of its fixed mortgage rates effective immediately.

The increases are the result of the increase in the cost of financing the capital markets on which ICS depends.

Martina Hennessy, managing director of mortgage advisory firm doddl.ie, said: “After experiencing mortgage rate cuts for several years, the rise in ICS Mortgages reminds us that we are in a low rate environment. , with their lowest mortgage rates in over 12 years.

“The upward pressure on funding costs could lead to higher rates from other lenders in the not-too-distant future.

“These rate increases, while untimely, reflect the volatility in global financial markets on which ICS, as a non-bank lender, depends for its funding.

“The current low rate environment and rising home values ​​provide mortgage holders with an opportunity to lock in lower rates and hedge against the overall rising cost of living.

“Around 98% of doddl.ie customers fix their mortgage, with fixed rates currently lower than variable rates.

“Buyers appreciate the security of repayments that fixed rates provide and changers tend to have a high loan-to-value ratio, so they can benefit from some of the very low fixed rates in the market, starting at 1.95%.”

ICS Mortgages has announced a rate increase on all of its fixed mortgage rates effective immediately (AP)

ICS Mortgages specializes in mortgages for public sector workers.

The 0.2% increase in ICS’ three-year fixed rate to 90% funding results in increased repayments for every €100,000 borrowed over a 30-year term by €11 per month.

The average mortgage for a first-time buyer drawn last quarter was €247,790, so the increase would result in a €26 per month increase in mortgage payments.

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“Even with further rate increases, ICS remains competitive with some of the anchor banks, with three-year fixed rates ranging from 2.25% to 2.55% and five-year fixed rates ranging from 2.4 % to 2.69%,” Ms Hennessy said. added.

“That compares to anchor banks offering these rates up to 3%.”

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

Leslie M. Gill