ICS Mortgages increases its fixed interest rate for homeowners

ICS Mortgages has increased its fixed mortgage interest rates for owner-occupier loans with immediate effect.

The move by ICS, which offered among the most competitive rates in the market, is expected to trigger similar moves by other players in the Irish mortgage market, and comes ahead of any decision by the European Central Bank (ECB) to increase interest rates generally across the bloc.

The rate changes, which will be applicable to new fixed rate applications from Monday, will hit those trading up harder than first-time buyers.

The changes will not impact on existing customers currently on a fixed rate or variable rate, or applicants who have an existing loan offer under agreed terms from ICS Mortgages.

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ICS Mortgages chief commercial officer Ray McMahon said the increases “reflect the significant upward pressure on the cost of financing fixed interest rate products in the international markets”.

“This is a result of considerable rate movements in capital markets due to inflationary pressures being felt across Europe and globally,” he said.

Higher rates

The increases of up to 0.45 of a percentage point will hit hardest those looking for lower loans as a proportion of their property value.

The changes see a five-year fixed rate for a mortgage with a loan-to-value (LTV) ratio of below 60 per cent increase from 1.95 per cent to 2.4 per cent, while those with an LTV of below 70 per cent will increase from 2.1 per cent to 2.45 per cent.

Five-year fixed-rate mortgages with an LTV of less than 80 per cent will increase from 2.2 per cent to 2.6 per cent, while those with an LTV of less than 90 per cent will rise from 2.5 per cent to 2.69 per cent.

A three-year fixed rate for a mortgage with an LTV ratio of below 60 per cent will increase from 1.95 per cent to 2.25 per cent, while those with an LTV of below 70 per cent will increase from 2.1 per cent to 2.3 per cent.

Three-year fixed-rate mortgages with an LTV of less than 80 per cent will increase from 2.2 per cent to 2.45 per cent, while those with an LTV of less than 90 per cent will rise from 2.35 per cent to 2.55 per cent.

“As a prudent lender, ICS Mortgages remains committed to offering competitive mortgages and we will continue to review our position on fixed interest rates on an ongoing basis,” Mr McMahon said. “Our market-leading low variable rates remain unchanged.”

Competitive

Martina Hennessy, managing director of mortgage advice company doddl.ie, said upward pressure on funding costs could result in other lenders also increasing rates in the near future.

“After experiencing mortgage rate decreases for a number of years, the uplift by ICS Mortgages is a reminder that we are in a low-rate environment, with mortgage rates the lowest they’ve been for over 12 years,” she said.

“These rate increases, while unwelcome, are reflective of volatility in global capital markets on which ICS, as a non-bank lender, are reliant for funding.”

She said the increase of 0.2 per cent on ICS’s three-year fixed rate up to 90 per cent finance results in an increase in repayments on every €100,000 borrowed over a 30-year term of €11 per month.

“The average first-time-buyer mortgage drawn down last quarter was €247,790, so the increase would result in a €26 per month increase in mortgage repayments,” she said.

“Even with new rate increases, ICS still remain competitive relative to some of the pillar banks, with three-year fixed rates ranging from 2.25 per cent to 2.55 per cent and five-year fixed 2.4 per cent to 2.69 per cent, whereas the pillar banks offer these rates at up to 3 per cent.”