Since the summer of 2022, the European Central Bank (ECB) has implemented 10 rate increases in response to inflation peaking at 10.6%. Despite the ECB’s ambition to maintain Euro inflation at 2%, it rose to 2.9% in December 2023 from 2.4% in November 2023. Speculation now suggests that the ECB might start decreasing rates in 2024, possibly as early as the summer.
It’s worth noting that Irish banks have been sluggish in passing on these rate increases. Despite the ECB raising rates by 4.5% since July 2022, the average rate for new mortgages in Ireland has only increased by about 1.5%. Consequently, when the ECB starts lowering rates, Irish banks are expected to be similarly slow to adjust. This means that even if experts predict a marginal drop in rates in 2024/2025, borrowers, except those on tracker mortgages, may not see an immediate impact.
For around 70,000 households in Ireland with fixed mortgage rates expiring in 2024, there’s an opportunity to experience lower interest rate hikes than initially anticipated. This situation provides these customers with a chance to review their finances and secure the best rate on the market. Those coming off five-year rates of 2.5% to 2.75% may find fixed rates in the 4.25% to 4.75% range. However, better rates, such as 3.65%, are still available, and many banks are offering cashback incentives for switching.
Considering experts’ predictions for the near future (to be taken with caution), and depending on the progress in securing a property, it may be prudent to consider fixing for 2 to 3 years if a favourable deal is available soon.
Article by Margaret Barrett
Managing Director at Mortgage Navigators,