Explanation: Catching Up With The Continentals And Their Fixed Rate Mortgages

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Grab some tapas and a San Miguel – because a little bit of the mainland is on the way. Long-term, low-rate fixed mortgages are coming, with Avant Money disrupting the market with products that will have a fixed interest rate for up to 30 years.

This means that your repayments will be the same from the day you make your first repayment until the last day of the mortgage.

“Fix and forget” is what it is called. And it offers great certainty. No wonder these products are standard in the rest of Europe.

Irish mortgage holders, on the other hand, are unusual to have an attachment to variable rates when borrowing to buy a home. The attractiveness of cheaper trackers in the past has a lot to do with it.

Banks are the big winners when people go for a variable rate, or even a three-year fixed rate, instead of fixing for 15 years or more.

A variable rate gives the bank full control over the profit margin of the mortgage. When wholesale rates go up, they can just increase the variable rate to increase their profit margin, and the customer loses.

And the bank does not need to consult the regulator.

But the market is changing, and changing drastically.

Most new buyers and money changers these days take out fixed rates, but often for up to three or five years. Longer term mortgages are something we have left to our continental cousins ​​until now.

Before Money and its non-bank rival Finance Ireland are about to force us to reconsider our lack of enthusiasm for long-term fixed mortgage rates.

In May, Finance Ireland launched 20-year fixed mortgages with rates as low as 2.6 percent. Avant did better with fixed rates between 15, 20, 25 and 30 years and interest rates lower than most of the short-term rates offered in this market. With the 20-year product there is a rate of 2.45pc, which is reminiscent of what is on offer in Spain.

These products are the most likely to be adopted by money changers and movers, but will also appeal to first-time buyers with large deposits. And there is flexibility built into the products.

What is needed now is for the Irish to get fixed rates. If you buy one, you know what your repayments will be each month. So you can take a nap and forget about it.


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