These rates are getting very close to what people are referring to as 'European norms' when we factor in that a lot of countries charge the customer an arrangement fee to set up their mortgage.
I've done an analysis, based on current rates (so there's no speculation factored in), of the cost of financing of 4 & 5 years based on the main lenders currently available rates. Factored in the reported new product from UB, and I threw in the best available LTV variable rate for comparison.
Results are: All based on initial loan balance of 300k (order left to right based on 5 year interest charge)
Assumptions:
Edit: I've tidied up the table to remove unnecessary rows, and removed fixed rates for AIB & EBS as they don't add to discussion
I've done an analysis, based on current rates (so there's no speculation factored in), of the cost of financing of 4 & 5 years based on the main lenders currently available rates. Factored in the reported new product from UB, and I threw in the best available LTV variable rate for comparison.
Results are: All based on initial loan balance of 300k (order left to right based on 5 year interest charge)
Offer | BOI 5 year | UlsterBank 4 year | BOI 3 year | PTSB 5 Year | KBC 3 year | 3.1% LTV Rate | PTSB 3 year |
Initial Rate | 3.00% | 2.60% | 3.00% | 3.20% | 3.19% | 3.10% | 3.20% |
Roll-to Rate | 4.20% | 3.30% | 4.20% | 4.00% | 3.10% | n/a | 4.00% |
Fixed Term (Months) | 60 | 48 | 36 | 60 | 36 | n/a | 36 |
Total (Months) | 300 | 300 | 300 | 300 | 300 | 300 | 300 |
Cash Back Y 1 | 6,000.00 | 1,500.00 | 6,000.00 | 6,000.00 | 3,000.00 | 3,000.00 | 6,000.00 |
Cash Back Y 5 | 3,000.00 | 0 | 3,000.00 | 0 | 0 | 0 | 0 |
Total Interest 4 years | €29,549.72 | €27,742.51 | €30,479.44 | €30,685.91 | €32,595.37 | €32,575.10 | €31,688.95 |
Total Interest 5 years | €34,726.71 | €36,269.70 | €38,272.43 | €39,132.03 | €40,628.00 | €40,803.15 | €41,979.84 |
Assumptions:
- 300K loan, over 25 year term, at < 80% LTV Rates
- BOI, EBS and PTSB 2% cash back upfront, with KBC 3,000, and UB 1,500. Additional 1% BOI back at end of year 5
- Cash back' amounts are included in total interest cost where applicable
- LTV of 3.1% is based on KBC being the best available in market for 80%LTV, with cash back offer
- KBC assumes current account offer (0.2% discount on rates) PTSB Rate is based on >250k balances.
- All rates are based on currently available roll-off rates from fixed term
- Ulster Bank is based on reported new 4 year fixed rate, assuming they keep 1500 cash back
- I've taken a shortcut in my model and assumed monthly capitalisations across the board
- Cash back amounts are assumed to be paid off balance to reflect time value of money.
Edit: I've tidied up the table to remove unnecessary rows, and removed fixed rates for AIB & EBS as they don't add to discussion
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