Average mortgage rate rises 5% in three months

I don’t think I’ve seen a more important figure with regards to the recently property market. However the headline would indicate this to be merely statistical flotsam.

rte.ie/news/2013/0111/averag … iness.html

The average mortgage is up marginally from 2.84% to 2.99% between September and November, which is itself a 5% increase. However there are 2 completely different groups of mortgage holders. Those with Trackers and those without.

Last Summer I was mortgage approved with a rate around 3.75%. Since then there have been two 0.5% increases in the variable rate from that provider. An increase in interest payments of over 25%.

If I had bought at the start of last summer my monthly mortgage payment today would be 25% greater than it was on day 1. 25% is a lot.

Combined with the removal of Mortgage Interest Relief, monthly mortgage payments for a new buyer today could be anything up to 33% higher (guess) for the same mortgage amount this time last year.

The 5% they refer to is 2.99%/2.84% and not the increase in repayments.
If you’re on a repayment mortgage an increase of 1% in interest rates would increase your repayments by 10% (less at shorter terms) so the increase from 2.84% to 2.99% is a 5% increase in the rate but it would only increase mortgage repayments by approx. 1.5%
Similarly, your repayments would have increased by 10% and not 25% (again assuming a repayment mortgage)

Still 10% is a serious increase in cost each month, given ECB rates haven’t moved and in the interim taxes (prsi, motor tax etc) have increased.

Also you need to take out trackers so its really much higher for new customers.

I’ve noticed it myself - the mortgage I wanted is now being reduced steadily.

Nearly all the banks are now offering mortgages at 4% or just over 4%

Dankse Bank (NIB) were previously priced out of it at nearly 5%.

But if you have a ‘Prestige’ account you can get money at just under 4%.

Of course.

I don’t know how you get those numbers.

If, for the sake of argument, I was on an interest only mortgage of 4% and the rate was increased to 5% my mortgage rate and my mortgage payments would have increased by 25%.

In my example I was talking about a first time buyer. In the first few years of your mortgage your payments are almost exclusively interest.

In my example my rate went from 3.75% to 4.75%. An increase of 26.66%. I rounded down for simplicity and to somewhat cater for capital repayments. That figure is a long ways off 10%.

I did explain that there are different segments in the market, differentiating between tracker holders and other mortgagees. I didn’t differentiate between those near the end of their term and those at the start as I, and the market, are only concerned about those at the start.

i think the point being made is that it would be just the interest part that would increase by 25% - your monthly payments wouldn’t increase by 25%.

For a new buyer, they would.

MIR no longer provides a buffer against rising interest rates.