Fixed rate rips off consumers

Irish lenders need to introduce more options for consumers in terms of fixed interest rates, PIBA, the country’s largest group of financial brokers has said in response to the latest figures from the Central Bank indicating strong growth in fixed interest rates for over one and up to three years.

Rachel Doyle, PIBA’s Chief Operations Officer at the association which represents 900 member firms said:  “There is absolutely no reason why meaningful longer-term fixed rates for periods of ten years and longer should not be available to Irish consumers who continue to pay some of the highest mortgage interest rates in Europe.

“The principle underlying fixed rates is that they give security of knowing what your repayments are going to be over the longer term.  In many countries they are fixed for 20 years and in some cases for the lifetime of the mortgage.  Only one Irish lender is offering a fixed rate of 10 years.”

Ms Doyle pointed out that the ECB rate is now at zero. She also said there is now considerably less risk for banks attached to funding a mortgage.  “Such risks are far less than they have ever been, since mortgage applications are now more tightly assessed with more stringent lending criteria applying.”

“Fixed interest rates for one to three years are not real fixed rates at all. High variable rates are forcing people into these poor fixed rates. Mortgage holders will come out onto variable rates which are way above the European norm.”

She said the issue points to more competition being needed in the Irish lending market. “It is hoped that more foreign lenders will be attracted to the Irish market. However, the excessive nature of the Central Bank’s mortgage lending rules and the slow pace of building, despite strong demand, are negative factors in this regard.”