An announcement by Bank of Ireland that it is to launch a 10-Year fixed rate mortgage is a positive development.
“The new 10-Year fixed rate mortgage from Bank of Ireland is highly competitive on price, beating many of the 5-Year fixed rate products and even matching some 3-year fixed rate deals*” said Mr. Frank Conway, Founder of MoneyWhizz.org, the personal finance and personal budgeting service.
Irish consumers have a mixed history with fixed rate loans
“Irish mortgage borrowers typically favour variable rate loans, where the rate of interest fluctuate as a result of the European Central Bank base rate of lending and other market conditions. However, this latest product from Bank of Ireland compares favourably to many variable rate offers, costing about 50 basis points more than many SVR deals on the market currently” said Mr. Conway.
Mortgage borrowers are typically liable for prepayment penalties when they repay fixed rate loans early.
“A major factor mortgage borrowers must consider when evaluating the merits of a fixed rate loans are what prepayment penalties apply. Typically, this can amount to a multiple of several months interest repayments which will need to be added to the loan amount if borrowers repay fixed rate loans early.” said Mr. Conway.
Signs of innovation
Bank of Ireland is showing signs of product innovation. This is the second incentive announced by the bank following an earlier announcement this year that it would pay the 1% stamp duty on home purchases for first time buyers.
“Clearly, Bank of Ireland is sending a strong message that it wants to attract attention and…customers. That in itself is a welcome departure following over a half decade of consolidation in the mortgage market.” said Mr. Conway.
*Source: National Consumer Agency