As a comment on the state of the market, does that not indicate that 1) Competitive + Market pressures are pushing rates to the downside (though they may take time to come through) and 2) Locking customers into longer rates will reduce the switching when the rate changes materialise. Important if you are a close to different LTV bands and particularly the 60% LTV band and are eligible to move to Avant. Outlier in the market and good margin of safety given rates are unlikely to drop meaningfully below that rate at this stage. Did I read recently that 1 in 5 switch's are to Avant? This should prompt action by the main lenders but they have their legacy book to consider.
I promised you a view on this. Sorry, it's a bit rambling (nothing new there!!)
Just to stress, these are my personal views. I have no role in anything to do with mortgage products or pricing with any lender, and I do not have any inside information.
** This post is for entertainment purposes only **
Firstly, I won't hide from what I said a year ago, so you can read what I was saying then, and where I've been wrong.
According to Charlie Weston in today’s independent
www.askaboutmoney.com
First time poster, long time AAM fan, particularly posts by Brendan, Sarenco, RedOnion, SeanOg & others. Context: FTB with a loan offer from PTSB, KBC & UB for just over 300k. Have read the best buy thread & many others, used Karls (great) Mortgage Calculator but just need a 2nd opinion...
www.askaboutmoney.com
3 material things changed since my crystal ball gazing last year:
1. AIB have completely changed their offering, following every other lender into competing on Fixed rates. They've dropped fixed rates right down to 2.1%, while leaving their LTV variable rates untouched, with the lowest at 2.75%.
2. Avant entered the market.
3. Ulster Bank, while still actively lending, announced a planned exit from the market.
All that said, my view hasn't really changed.
Avant brought in 'game changing' rates, but in reality the lowest rate is 1.95%. The same effective rate was kind of available to some customers when you factor in cashback deals - we've already discussed a few (very specific) examples on the forum where it was the same for customers to switch to KBC vs Avant, but with more flexibility to overpay. Plus, the headline rate of 1.95% is only available for LTVs below 60%.
I still believe we'll see an effective rate of 2% (or the psychological 1.95%!) as being the floor for now. We'll see the banks strip back their products so that they can offer a 'no cashback' mortgage that matches Avant's offering. PTSB & BoI have both launched such products, although the rates aren't there yet.But apart from the repackaging, and better headline rates in ads, the effective rate for a 2 to 3 year term won't change.
I still think we're more likely to see those 2% to 2.2% rates being available for 5 - 7 years, than 1 year rates dropping under 2%. AIB have already done it with the 5 year green rate, and Avant have the same price right out to 7 years at the lower LTV products. The 4 & 5 year term is where the banks are currently competing, with effectively an inverted rate curve displaying.
I think we will possibly see a 2% 10 year fixed rate in the near term, if any bank thinks there might be a market for it.
When it comes to the question 'should I fix for 2 years or 5', it depends on the lender, and the rates offered.
AIB as an example (just because it's the one I've mentioned earlier):
Take a 'typical' borrower at <80% LTV.
1 or 2 year fixed rates are 3.05%.
5 year green rate is 2.15%
LTV Variable is 2.95%
If you stay on the Variable at 2.95%, the rate would need to drop to 1.95% at the end of the 1st year for you to end up with the same effective rate. If rates didn't change for 2 years, it'd need to drop to around 1.6%