Buy 10-year mortgages to beat ECB, says expert

By Eamon Quinn

First time and existing borrowers should buy 10-year fixed-rate mortgages as the ECB prepares to hike interest rates by the end of 2019, a mortgage expert has said.

Michael Dowling, chair of the mortgage committee at the Irish Brokers’ Association, said he saw no logic in buying a two- or three-year fixed rates when those rates would expire just as the ECB was likely to be raising interest rates. He said a handful of lenders currently offer rates of around 2.9% fixed for 10 years for loan-to-value ratios of up to 80%, and two lenders offer a fixed rate of 3.5% for 10 years at a loan-to-value ratio of 90%.

“I am saying that borrowers should be looking at 10-year rates because they represent good value and because there is only one way that [ECB] rates can go,” he said. Following a meeting of the ECB this week, analysts predict the central bank will make its first interest rate increase, in late 2019.

The ECB at a key meeting stuck to its current pace of bond-buying, which has held down rates at rock-bottom levels, but was preparing to start turn the tap off its quantitative easing programme next year, analysts said.

For years there has been much criticism of Irish lenders who promote fixed rates over very short terms of two or three years, whereas many European and US borrowers readily borrow at 10-year terms.

Central Bank figures published yesterday show that fixed-rate mortgages account for 19% of the homes’ loans market here and have grown because borrowers are buying fixed rates loans of one

to three years.


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