RTE Business news covered a story that appeared in the Independent, the story was based upon our sister company’s report (Irish Mortgage Brokers) in which it was forecast that fixed rates may cease to exist this year because of funding pressures in the banks.
“BANKS ‘PLAN TO SCRAP FIXED RATES’ – The Irish Independent quotes a mortgage expert as saying that banks and building societies are planning to abolish fixed-rate mortgages because they are too expensive for lenders to provide.
Banks would prefer to have borrowers on products with variable rates, which can be increased whenever lenders want, according to Karl Deeter of Irish Mortgage Brokers – who the paper says correctly predicted last year’s rises in variable rates. He said he was getting indications from lenders that fixed rates may be discontinued this year.
The Indo says AIB will let an existing home-owner fix for three years at rates as low as 3.89%. This compares with a variable rate of 3.3%. But the swap rates (the market rate) that banks pay for money range from 7% for two years to 11% for five years.
The paper quotes Mr Deeter as blaming political pressure on state-supported banks including AIB, Bank of Ireland, EBS and Irish Nationwide for the fact that lenders were offering loss-making fixed rates.”
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