Lenders reduce mortgage rates

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Over the past year or so we have witnessed a number of products initiatives designed to attract customers by offering up front incentives that will invariably be clawed back over time through higher mortgage rates.

It is easy to understand the attraction of these cash back offers especially as saving is so difficult when rents are so high. But you get nothing for nothing in this world and lenders offering cash back incentives inevitably charge higher mortgage rates than others.

The time to choose the right mortgage is at the outset. Your mortgage is typically a 25 year plus agreement.

 It is easy to convince oneself that you will switch to a cheaper lender in a number of years and the whole cash back process will make sense. However this switch is based on a range of assumptions the most glaring of which is the fact that only around 5% of mortgage holders switch to a better rate lender during the course of their mortgage. Also circumstances may change; the arrival of kids, changing working hours, changing economies and changing lending practices so that the assumption that switching will be easy in the future may not be well founded.

 

The good news is that KBC and AIB have introduced some genuine improvements to their mortgage range.

KBC now offer 10 year fixed rates from 2.95%.

AIB reduced their standard variable rates so that it now sits at 25% less than Bank of Ireland.

So please tread carefully and always seek our advice before signing up for a mortgage