Fresh and existing borrowers are advised to buy 10-year fixed-rate mortgages as the European Central Bank (ECB) plans to increase interest rates by the end of 2019, said a mortgage expert.
Michael Dowling, head of the mortgage committee at the Irish Brokers’ Association, said he doesn’t find it logical in buying a 2- or 3-year fixed rates when those rates would expire just at the time ECB was likely raise interest rates. He said a number of lenders presently offer rates of about 2.9 percent fixed for 10 years for loan-to-value ratios close to 80 percent, and two lenders give a fixed rate of 3.5 percent for 10 years at a loan-to-value ratio of 90 percent.
“I’m saying that borrowers should envisage 10-year rates because they make good value and because there’s only one way that [ECB] rates can go,” he said. After an ECB meeting this week, analysts forecast that the central bank will increase its first interest rate , by the end of 2019.
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The ECB at a prominent meeting stuck to its recent pace of bond-buying, which has kept rates down at rock-bottom degree, but was planning to start turn the tap off its quantitative soothing programme next year, analysts said.
For many years there has been numerous opposition of Irish lenders who encourage fixed rates over very short terms of 2 or 3 years, whereas large number European and United States borrowers easily borrow at 10-year terms.
Central Bank figures which was published yesterday reveals that fixed-rate mortgages constitute 19 percent of the homes’ loans market here and have increased because borrowers are buying fixed rates loans of 1 to 3 years.
Credit: Irish Examiner