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Should I Fix My Mortgage Ireland 2023? Ultimate Mortgage Fixing Guide

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With runaway inflation across the continent the European Central Bank looks set to hike interest rates with the cost of Irish mortgages set to continue to rise as a result. 

So the question your probably asking is should i fix my mortgage in Ireland 2023?

should i fix my mortgage

ECB rates have risen by a staggering 4.0% in the last year and are due to rise again when the ECB rate gurus next meet.

The financial markets are expecting rates to have risen by at least 0.5% in the next 12 months, which would add a further €100 a month to the average Irish mortgage.

The good news is that by fixing your mortgage rate now you can dodge the coming rate hike and probably cut your current repayments at the same time.

The Irish mortgage market is almost unique in having fixed mortgage rates priced well below variable rates and over 140,000 variable, 240,000 tracker and around 200,000 fixed rate mortgage holders could save big by switching now and fixing on a lower rate, read on or check out our video explainer to see how much you could save and how.

How much you could save by fixing? – Should I Fix My Mortgage Ireland 2023

According to the latest Irish Central Bank figures available, the average variable rate in Ireland is around 3.8%, this is probably what you are on if you are with Bank of Ireland, AIB, Ulster, KBC and PTSB and not on a tracker which now average at 4.65%.

If you are with any of these banks then you should look into switching to a fixed rate.  If you’re not sure about what rate you’re on dig out your annual mortgage statement, or take a gander at the table below.

Variable/Follow On Rates Comparison
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% 4.45%
Up to 80% LTV 3.95% 6.20% 6.20% 4.15% 3.95% 5.20% 4.15% 4.70% 4.45%
Up to 90% LTV 3.95% 6.20% 5.15% 4.15% 4.15% 5.20% 4.15% 4.70% 4.75%
*Probable follow on variable rates post fixed period based on current variable rates by provider, rates updated 5/12/23. PTSB rates applicable from 17/01/24

So let’s run the numbers on an average outstanding loan of €200,000 and average outstanding term of 15 years. This is the case for Joe Average based on data from the Irish banking and payments federation.

  • Total monthly at variable rate of 3.8% = €1,459
  • Total monthly at a fixed rate of 2.96% = €1,372

That’s a saving of €87 a month or €15,660 over the full term and that’s not even an extreme case, that’s just Mr Joe Average.

However, that’s not even the biggest reason for you to switch.

The no 1 reason to switch is that you will cap your repayments, protecting yourself from further rises.

The Pro’s and Con’s of Fixed v Variable – Should I Fix My Mortgage Ireland 2023

The bizarre thing is that fixed rates are usually a better choice for mortgage holders, 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.

In fact that’s why fixed rates in other countries are usually more expensive than variable, they are effectively ‘insurance’ that your repayments can’t rise.

Let’s take Mr Joe Average again who is on a variable rate of 3.8% paying €1,459 a month.

Remember that expected ECB rate increase of 2%? The banks will pass that straight through to Joe increasing his variable rate to 5.8%.

  • Total monthly at variable rate of 3.8% = €1,459
  • Total monthly at variable rate of 5.8% = €1,666
    Total monthly at a fixed rate of 2.96% = €1,372

If the ECB hike rates by 2% as expected, Joe’s monthly repayments on his variable rate will go up by €207 a month. Making his monthly repayments €294 more a month than if he had fixed for 15 years with Avant Money.

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.

That said on rates falling, most experts expect interest rates to stay high for years to come and never to fall back to the super low rates seen between 2008-2022.

Plus you might not have to pay a ‘breakout’ fee to get our of 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. 

Who Should I Fix With? – Should I Fix My Mortgage Ireland 2023

For most people we advise switching to the non bank lenders. As new entrants these lenders offer attractive long term rates, but also the best variable rates once you come off your fixed rate period.

This gives these mortgages a much lower average rate across the whole mortgage term, known as the APRC [1].

We would also encourage you to fix for as long as you’re comfortable with. Although this may cost you more in the short term, the benefit of capping your repayments will out weight the extra cost for most people.

The best fixed deals in the market across all 7 lenders and 290 mortgage products are shown below.

Rank Mortgage Product Rate Value Repayment Security Ease of Approval Approval Speed Overall Rating
#1. Avant Money Mortgage 10-30 Yr Fixed 4.25 5.0 4.0 5.0 4.58
#2. Avant Money Mortgage 7 Yr Fixed 4.25 3.5 4.0 5.0 4.13
#3. Haven Mortgage 10 Yr Fixed 3.5 4.0 3.5 5.0 3.95
#4. Avant Money Mortgage 5 Yr Fixed 4.5 2.5 4.0 5.0 3.90
#5. Haven Mortgage 7 Yr Fixed 4.0 3.5 3.5 3.0 3.55

Rating Weighting: Rate 30%, Security 30%, Approval 20%, Speed 20%, updated 26/09/2023

How to fix your mortgage rate – Should I Fix My Mortgage Ireland 2023

The simplest way to fix 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 lenders like Avant Money.

So the best way to fix your mortgage and save big is to switch your mortgage to one of these ‘non bank’ lenders. With regulation and new online platforms emerging in the last few years switching is now quite straightforward, most brokers will handle it for free as they are paid a commission by the lenders.

In a Nutshell – Should I Fix My Mortgage Ireland 2023

So should I fix my mortgage?

Probably.

With such uncertainty about interest rates right now almost everyone should look into fixing. Being able to cap your repayments against future potential interest rate rises, makes sense for almost anyone with a mortgage.

Even those with trackers or on shorter term fixed rates need to think about if they can afford not to.

If your on a variable though it really is a no brainer, you will save thousands and remove the worry around rising repayments.

Next Steps – Should I Fix My Mortgage Ireland 2023

You can read more about the switching process here or check out the best fixed rates here.

If you’re on a tracker you can read our guide to switching from a tracker here or if you are in a fixed rate our guide to breaking your fixed rate here.

If you need individual advice on the best options for you, you can book a mortgage call with a qualified advisor here.

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