ICS Mortgages announces further interest rate hike – The Irish Times

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ICS Mortgages will increase its fixed rates for new homeowner mortgages by 0.5% starting next month. The non-bank lender, which controls around 5% of the Irish mortgage market, said the increase would apply to all loan-to-value (LTV) tranches, but obviously not to existing customers on fixed-rate contracts.

This is the third time ICS, which is owned by Dilosk, has raised its fixed rates this year after hikes in March and May. ICS’ variable rates, which it recently increased by 1.25%, remain unchanged.

“These fixed rate increases reflect continued upward pressure on the cost of funding fixed interest rate products and the changing interest rate environment,” the company said in a statement.

The move is expected to be followed by other mortgage providers, which will add financial pressure on Irish households at a time of rising energy and food costs. So far, most of the major lenders here have not changed their variable rates in response to the European Central Bank’s rate hikes, but that should change in the coming weeks and the ECB is planning another rate hike in october.

First-time buyers with a 10% down payment who wish to benefit from ICS’ five-year fixed rate will now pay a rate of 4.19% compared to 3.69% previously and only 2.5% in March.

This means a first-time buyer who borrows €250,000 over 30 years will now pay around €1,210 per month compared to €1,140 per month previously, said Daragh Cassidy of price comparison site bonkers.ie. At the beginning of the year, they would have paid only €984 per month.

Movers or those with a 20% down payment will now pay €1,197 per month compared to €1,128 per month previously. “Before the March hike, they were only paying €946 a month, a difference of €251 a month,” Mr Cassidy said.

“All eyes are now on the major retail banks: AIB, BOI and PTSB to see when they will raise their rates. So far they have absorbed the entire 1.25% rate hike from the ECB for their non-trailing clients,” he said.

“However, when the ECB next meets at the end of October, it is likely to raise rates again by at least 0.5%. It’s at this point that banks are likely to revise their rates,” he said, while suggesting that anyone on a tracker or floating rate should consider locking into a long-term fixed rate as long as there is still good value.

“With the cost of living rising and gas and electricity bills at record highs, the last thing households want to deal with is rapidly rising mortgage costs. However, this is what households will face over the next few months as interest rates start to really rise,” Cassidy said.

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