There is a growing trend among homeowners towards fixing their mortgages for longer terms, one mortgage broker says.
Ahead of heightened expectations of a rate rise from the European Central bank this summer, Joey Sheahan, Head of Credit with MyMortgages.ie, said where mortgage holders were previously looking to fix for three to five years, they were now looking at locking in for up to a decade or longer.
"There's a golden opportunity now to switch mortgage providers and lock in longer term rates which start from 2.5% fixed for up to 25 years," he said.
"That would save a borrower €320 a month or about €96,000 over the lifetime of a mortgage based on a €300,000 loan based on €500,000 value over 25 years, compared to a Standard Variable Rate of 4.5%," he explained.
Mr Sheahan advised mortgage holders who are already on a fixed rate that is due to expire in the coming months or years to call their bank and check if there is a breakage fee and consider locking in with a new product before rates start to increase.
"We're seeing in many cases that there is a zero breakage fee for people to leave so they can leave early and lock into a longer term rate," he said.
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ECB President Christine Lagarde indicated yesterday that the bank could end its bond purchasing programmes "early in the third quarter", and could then raise interest rates "only a few weeks" later.
ECB policymakers will next meet on June 9 and July 21 to decide their course of action.
It is expected the July date is most likely for any rate hike.
Commentators are anticipating hikes of up to 0.75% this year and into next year.
Joey Sheahan said it was not inconceivable that rates could increase to over 2% at the ECB level in the years ahead.
"Given where rates are at, it's not unfathomable to think that rates will be 2% above where they are today within a matter of years," he said.
However, he urged mortgage holders not to panic as banks stress test mortgages with a margin of up to 2% at the drawdown stage.
