Fixed or variable mortgage rate? To fix or not to fix, that is the question.
In some countries whether to choose a fixed or variable rate mortgage is finely balanced based on your personal circumstance. Not in Ireland where you should almost certainly get yourself onto a fixed rate as soon as possible.
Here’s the 3 things you need to know if you are on or are considering a variable rate mortgage
- Variable rates are set by the banks, so the banks can hike your repayments as they like
- Variable rates are not tied to ECB rates so variables may not fall if ECB rates fall
- Variable rates are predicted to rise to over 6% in the next 18 months
When I headed up mortgages at PTSB I got to know the Irish mortgage inside out. The Irish market is almost unique in having fixed mortgage rates priced well below variable rates usually. Right now they are quite close, but that is likely to change with variable rates predicted to head to 5-6% in the next 18 months.
| Follow on Variable Rate | Avant Money | ICS Mortgages | Finance Ireland | Haven Mortgages | AIB Mortgage | MoCo | EBS Mortgage | Permanent TSB | Bank of Ireland |
| Up to 50% LTV | 3.75% | 6.20% | 6.40% | 3.75% | 3.75% | 5.20% | 4.15% | 4.40% | 4.15% |
| Up to 60% LTV | 3.75% | 5.95% | 6.20% | 3.95% | 3.95% | 5.20% | 4.15% | 4.50% | 4.15% |
| Up to 70% LTV | 3.75% | 6.95% | 6.20% | 3.95% | 3.95% | 5.20% | 4.15% | 4.50% | 4.15% |
| Up to 80% LTV | 3.95% | 6.20% | 6.20% | 4.15% | 3.95% | 5.20% | 4.15% | 4.70% | 4.15% |
| Up to 90% LTV | 3.95% | 6.20% | 5.15% | 4.15% | 4.15% | 5.20% | 4.15% | 4.70% | 4.15% |
This means switching to fixed rates could save you thousands, the average saving is actually over €20K, and also protect you against rising monthly repayments.
Read on to find out why and how you can switch from a variable to fixed rate and save.
- The mortgage market kinks that make fixed rates best – Variable rate mortgage Ireland 2024
- How much you could save by fixing – Variable rate mortgage Ireland 2024
- The pro’s and con’s of fixed v variable – Variable rate mortgage Ireland 2024
- How to fix your mortgage rate – Variable rate mortgage Ireland 2024
Why fixed rates the best choice – Variable Rate Mortgage Ireland 2024
The financial crash of 2008 still looms large over the Irish mortgage market for two reasons. In chasing volume the Irish banks wrote a huge volume of loss making tracker mortgages that they are still on the hook for and the tightening of lending rules across Europe led to reduced profits for lending.
These factors painted the banks into a corner, leading to them hiking the mortgage rates of their non tracker customers to an average of 4.2%.
| Follow on Variable Rate | Avant Money | ICS Mortgages | Finance Ireland | Haven Mortgages | AIB Mortgage | MoCo | EBS Mortgage | Permanent TSB | Bank of Ireland |
| Up to 50% LTV | 3.75% | 6.20% | 6.40% | 3.75% | 3.75% | 5.20% | 4.15% | 4.40% | 4.15% |
| Up to 60% LTV | 3.75% | 5.95% | 6.20% | 3.95% | 3.95% | 5.20% | 4.15% | 4.50% | 4.15% |
| Up to 70% LTV | 3.75% | 6.95% | 6.20% | 3.95% | 3.95% | 5.20% | 4.15% | 4.50% | 4.15% |
| Up to 80% LTV | 3.95% | 6.20% | 6.20% | 4.15% | 3.95% | 5.20% | 4.15% | 4.70% | 4.15% |
| Up to 90% LTV | 3.95% | 6.20% | 5.15% | 4.15% | 4.15% | 5.20% | 4.15% | 4.70% | 4.15% |
Although this did indeed boost lending revenues it left the banks with another problem, these higher rates were uncompetitive compared to those offered by new lenders entering the Irish market. Putting at risk the strangle hold that AIB and BoI had on the new mortgage market.
Up until 2008, Irish banks had sold very few fixed rate mortgages preferring the less risky (for them) variable rate. Now though they realised that they could use low fixed rates to keep out the new market entrants while keeping variable rates high for existing customers.
The big gap between fixed or variable rate mortgage pricing has resulted in fixed rate mortgages now gobbling up over 80% of all new mortgages. Rising from just 20% back in 2008.
These kinks are what has led to an upside down mortgage market, where fixed rates were half of variable rates. The banks are yet to pass on recent ECB rate increases to variable customers so they appear competitive at the moment, but most forecasters agree that is likely to change.
The Irish Central Bank assumed that 60% of the ECB rate increase of 4.5% will be passed on to variable rate customers, which would see variable rates rise by over 2% in coming months. [1]
The good news is that there is nothing stopping you switching to a fixed rate and saving right now.
How much you could save by fixing – Variable Rate Mortgage Ireland 2024
The average variable rate mortgage in Ireland right now is 4.2%, this is the rate that most of Bank of Ireland’s, AIB’s and PTSB’s non tracker customers are on, over 140,000 mortgage holders.
If you are with any of these banks and not on a tracker then you should look into switching to a fixed rate. Anyone who bought after 2008 is probably on a high variable rate as trackers haven’t been available since then.
The best fixed rate in the market is currently Avant Money’s 7 year fixed rate. Avant Money are backed by the Spanish banking giant Interbank.
| Fixed Term APRC | Avant Money | MoCo | Haven Mortgages | AIB Mortgage | EBS Mortgage | Permanent TSB | Bank of Ireland | ICS Mortgages | Finance Ireland |
| 3 Yr | 3.97% | 5.21% | 4.00% | 4.09% | 4.20% | 4.61% | 4.60% | – | 6.64% |
| 4 Yr | 3.90% | – | – | 4.19% | – | 4.28% | – | – | – |
| 5 Yr | 3.97% | 5.06 | 4.30% | 4.47% | 4.50% | 4.72% | 4.60% | – | 6.35% |
| 7 Yr | 3.95% | – | 4.60% | 4.58% | – | 4.79% | – | – | 6.04% |
The pro’s and con’s of fixed v variable – Variable mortgage rate Ireland 2024
The bizarre thing is that fixed rates are usually a better choice for mortgage holders than a variable rate mortgage, even before you compare fixed versus variable rates savings, because they are less risk.
For most people the certainty of knowing the payment at the end of the month won’t rise for 5, 10 or even 20 years far outweighs the risk that they might end up paying more than the going rate at some point.
This certainty has real value if you want to make sure you don’t get into financial trouble and would usually come at a premium. In fact that’s why fixed rates usually are more expensive than variable, they are effectively ‘insured’ or ‘hedged’.
| APRC at LTV < 50% | Avant Money | Haven Mortgages | AIB Mortgage | EBS Mortgage | Permanent TSB | Bank of Ireland | ICS Mortgages | Finance Ireland |
| 10 Yr | 3.92% | 4.70% | 4.76% | – | – | 4.90% | – | – |
| 15 Yr | 3.90% | – | – | – | – | – | – | – |
| 20 Yr | 3.90% | – | – | – | – | – | – | – |
| 25 Yr | 3.90% | – | – | – | – | – | – | – |
| 30 Yr | 3.90% | – | – | – | – | – | – | – |
In today’s upside down world though long term fixed rates are actually discounted versus short term fixed rates. This is mainly due to banks wanting to keep existing customer rates high.
There are still a couple of things to watch out for though with fixed rates. As well as the chance you could end up paying more if rates fall, you can also be penalised if you want to payback early.
This can happen if an even better fixed deal becomes available or if you need to move house or if there is a split in the family for example. The sweet spot of savings and flexibility therefore depends on your personal circumstances, with most people landing on fixing between 3 to 5 years.
Even then you might not have to pay a ‘breakout’ fee in your fixed period. Under EU legislation the banks can only charge you the difference between the rate when you originally fixed and the rate when you look to repay. This means you can often ‘breakout’ with no penalty at all.
How to fix your mortgage rate – Variable rate mortgage rate Ireland 2024
The simplest way to fix your variable rate mortgage is to get in touch with your existing lender and get them to move you to their fixed rate. This option although hassle free is unlikely to deliver big savings, as many of the fixed rates are reserved for new customers only and the best fixed rates in the market are with the non bank lender Avant Money.
Avant Money offer the lowest rate on the market for 3, 4, 5 or 7 years. For those who really want to lock in the future they also offer the one mortgage which allows you to fix for the whole of your term.
With regulation and new online platforms emerging in the last few years switching is quite straightforward, most brokers will handle it for free as they are paid a commission by the lenders. In fact moneysherpa have their very own team of mortgage sherpas who are available for a free, no obligation video call.
In a nutshell – Variable Rate Mortgage Ireland 2024
The financial crash has upended the mortgage market in Ireland, resulting in record savings for those looking to fix their mortgage and avoid a variable rate mortgage.
The average saving from fixing on the best rates in the market is €20,000+.
The downside of fixing is limited, especially if you go for a shorter fixed rate of 3 or 5 years.
Switching provider to fix your rate is easier than ever, with many brokers including moneysherpa having the best fixed rates available.
What’s next – Variable Rate Mortgage Ireland 2024
You can also check out our deep dive reviews into the best mortgage rates and products by clicking the links below.
- Compare Mortgage Rates including all the rates side by side
- Best Fixed Rate diving into short, medium and long term rates and what’s best for you
- Best Switcher Mortgage what rates suit once off and multiple time switchers
If you want to know more about switching you can find our ultimate switching guide here.
To book a free, no obligation video call with one of our mortgage sherpa’s now you can go here.
To calculate your own switch and fix savings you can use our handy switcher calculator here.
