Bank of Ireland has cut mortgage rates for fixed rate customers by as much as 0.35 per cent, saving customers and signalling that competition in the mortgage market is heating up.

The best rates, however, are for those with hefty downpayments and low loan-to-values (LTVs), which may preclude many first-time buyers, while KBC Bank still has one of the lowest rates on the market at 2.9 per cent.

The rate cuts, which kicked in on June 6th, range from 0.10 per cent to 0.35 per cent, and apply to all of the bank’s mortgage rates except for those looking for a 10-year fixed rate on a LTV of 80 per cent of less, where there was no change.

The best rate the bank offers is now to those willing to lock in to a two- or three-year fixed rate, with the rate dropping by 25 basis points to 3 per cent. There is a caveat, however, in that the customer must have a loan-to-value of 80 per cent or less, which will preclude many new buyers from this rate. The best rate for those with an LTV of 80 per cent or above is 3.2 per cent.

The change means that someone switching from the standard variable rate (4.5%) could save as much as €150 a month on a €200,000 mortgage by locking into the new low rate of 3 per cent.

Existing customers

The bank says that the new fixed rates are available to existing customers on variable rates or those coming to the end of their current fixed-rate period.

Goodbody Stockbrokers hinted at a rise in competition in the market in a note on Tuesday morning, when it said that Bank of Ireland’s decision to cut rates was not a surprise given “the bank’s share of new Irish mortgage lending [estimated at 24-25%] has come under pressure in recent quarters”.

In recent weeks Ulster Bank, KBC Bank and Permanent TSB have all adjusted their pricing as activity in the housing market increases on the back of initiatives such as Help-to-Buy and soaring prices in the rental market. Latest figures show that mortgage approvals jumped 62 per cent in the first quarter of this year.