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Mortgage-holders could save €80 a month with green deals, brokers say

Brokers Ireland says anyone who has not reviewed their home loan in a while is likely missing out on savings

In order to qualify for green mortgage rates, a home is likely to need a BER of B3 or better but the rates are the best in the market
Colin Gleeson
Fri Jul 26 2024 - 18:58

Mortgage-holders could save almost €80 per month by switching to the best green deals on offer, according to brokers.

It comes as PTSB confirmed that existing homeowners would be able to avail of green fixed rates of as low as 3.5 per cent from the end of July. The bank announced those rates for new borrowers in May.

In order to qualify for the rate, the mortgaged property must have a BER of A1 to B3 inclusive, and have at least three years remaining on the mortgage term.

Rachel McGovern, director of financial services with Brokers Ireland, said the move suggests green mortgages are now “among the best rates in the market”.

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“A customer moving from a current average rate of 4.17 per cent to the new mortgage and having a LTV of 60-80 per cent could save €78.16 per month [on a mortgage of €250,000 or more],” she said, adding that it was “a time for very careful consideration” for mortgage-holders and suggesting that there are “good savings to be got”.

She said many mortgage holders had not reviewed their loans for several years and were “leaving too much of their money with lenders”.

By way of comparison, Bank of Ireland’s three year fixed rate for existing customers is 3.9 per cent for a BER A rated home, or 3.95 per cent for a BER B rated home. A spokesman for the bank pointed out that the rate applies to all LTVs, and all value of home loan.

AIB offers green mortgages from rates as low as 3.45 per cent.

“The likelihood is that with the increase in property values over recent years, many mortgage holders will have a much improved LTV ratio – the value of your property in proportion to your loan,” Ms McGovern said. “That could give rise to eligibility for a better loan rate, regardless of your BER.”

The comments come as former Central Bank deputy governor Stefan Gerlach said a September interest rate cut by the European Central Bank (ECB) was “very possible”.

Mr Gerlach, deputy governor at the bank between 2011 and 2015, said he expected euro-zone inflation pressures to abate further which, along with a “natural weakness” in economic activity, would allow the ECB to continue reducing rates. “The likelihood of a rate cut in September is material,” Gerlach, currently chief economist at EFG Bank in Zurich said.

Colin Gleeson

Colin Gleeson

Colin Gleeson is an Irish Times reporter