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Bank of Ireland cuts fixed rates as chance of ECB rise seen as remote

Independent.ie logo Independent.ie 19/07/2019 Charlie Weston
a piece of cake on a plate: Bank of Ireland. Stock photo: Getty Images © 2008 AFP Bank of Ireland. Stock photo: Getty Images

Bank of Ireland has reversed mortgage rate increases it announced at the start of the year. Although small, the cuts reflect the fact there is no prospect of a European Central Bank rate rise for years. The bank is reducing its five-year fixed rate by 0.2pc to 3pc and its 10-year rate by a similar amount to 3.3pc for those whose property is worth at least 20pc more than the value of the loan.

This will mean a €300,000 loan over 30 years will be €33 a month cheaper than previously. Over a year this works out at a saving of €391 for those on the new rate. The two new rates will only apply to those taking up a new fixed rate. Bank of Ireland's move to reverse earlier rate rises comes as expectations have grown of rate cuts across the entire mortgage market.

Pedestrians walk bast a brach of the Bank of Ireland near the Grand Canal Dock, in Dublin on January 8, 2019. - British MPs on Wednesday begin five days of debate ahead of a historic delayed vote on Prime Minister Theresa May's Brexit deal, a day after giving her a stinging blow aimed at preventing the country from crashing out of the EU with no agreement. Ireland was opposed to Brexit and is fearful both of the impact on trade with biggest economic partner Britain and any destabilising influence on the 1998 Good Friday Agreement, which ended three decades of sectarian conflict. (Photo by Paul FAITH / AFP)        (Photo credit should read PAUL FAITH/AFP/Getty Images) © Getty Pedestrians walk bast a brach of the Bank of Ireland near the Grand Canal Dock, in Dublin on January 8, 2019. - British MPs on Wednesday begin five days of debate ahead of a historic delayed vote on Prime Minister Theresa May's Brexit deal, a day after giving her a stinging blow aimed at preventing the country from crashing out of the EU with no agreement. Ireland was opposed to Brexit and is fearful both of the impact on trade with biggest economic partner Britain and any destabilising influence on the 1998 Good Friday Agreement, which ended three decades of sectarian conflict. (Photo by Paul FAITH / AFP) (Photo credit should read PAUL FAITH/AFP/Getty Images) Last January, Bank of Ireland surprised the market when it increased the cost of fixing for five and 10 years. At the same time it reduced the cost of some short-term rates. Now the bank has reduced its 10-year rate to 3.3pc for those with loan to value up to 80pc, and to 3.5pc for loan to value above 80pc. Bank of Ireland is also launching a 0.2pc discount on new mortgages for A-rate homes or those upgrading the energy rating of their property.

A view of St Patrick's tower and Bank of Ireland logo, in Dublin center.
On Wednesday, January 16, 2019, in Dublin, Ireland. (Photo by Artur Widak/NurPhoto via Getty Images) © Getty A view of St Patrick's tower and Bank of Ireland logo, in Dublin center. On Wednesday, January 16, 2019, in Dublin, Ireland. (Photo by Artur Widak/NurPhoto via Getty Images) The fixed rate discount will be available from drawdown on new borrowing to finance the purchase, construction or renovation of residential buildings with an A-rated or to achieve an A-rated BER energy performance. The bank is also offering a green home improvement loan at 6.5pc, for amounts from €2,000 to €65,000. Businesses, including farmers, will also benefit from reduced rates for investment in energy saving improvements. 

Daragh Cassidy of price comparison site Bonkers.ie said the bank's cut to its fixed rates was welcome, but longer-term fixed rates here were poor value compared with the rest of Europe. Fixed rates as low as 2pc or less over 20 to 25 years were possible in some eurozone countries, he said. In Ireland the maximum a mortgage holder can fix for is 10 years.

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