There seems to be a spike in recent history of people opting for a fixed mortgage. The Irish housing market has been going through a very volatile and unpredictable period, and many believe we are still a ways away from entering a stable market. The Central Bank of Ireland show that recently over 65% of new mortgages in Ireland are fixed. As opposed to variable loans, fixed mortgages offer stability and certainty in an otherwise uncertain market. A couple issues with fixed mortgage however, is that you are stuck at the rate you signed at even if market rates decrease. You may also face penalties if you try to pay off the loan earlier. Fixed rates are also generally more expensive than variable rates due to the guaranteed stability.
Currently, depending on the lender, fixed rates are generally within the range of 2.3% to 3.8%. These rates all rely on each individual case however. Variables such as credit score, loan to value ratio (LTV) and length of fixed mortgage all play a role in determining the mortgage rate.
There is also a trend where the longer the fixed rate, the higher your rate will be. This is due to increased security on the loan rate. For instance, Finance Ireland has rates for a 3 year fixed mortgage that starts at 2.35% and can go up to 2.65%. While their 5 year rates can get as high as 2.80%. The maximum amount of time they offer for a fixed rate is 10 years, and that may charge you 3.60% depending on your LTV.
Despite fixed rates being more expensive in general, the current market shows some rates that prove the opposite. Bank of Ireland has its best variable rate at 3.90% with a 60% or less LTV. With the same LTV, you can get a rate of 2.90% with cashback, or a 5 year fixed rate of 2.50% with no cashback.
Cashback and incentives are also something to look at when deciding where to go for a mortgage. Some banks offer cashback (usually 2-3%), while others offer money towards legal fees (around €2,500).
There are 9 different institutions that offer loans in Ireland, and each has its pros and cons. When choosing what type of plan is right for you, and what lender is right for you, it is important to do your research and weigh the options. Seeking professional help is always a great idea, especially for first time buyers.