April 27th, 2020

In a normal banking environment, rates are tiered from the lowest, Variable, to progressively higher Fixed Rates over time reflecting the "security" of the longer term fixed option. Right now, with the exception of AIB, the inverse is the case. Variable Rates as high as 4.5% persist, with the same institution offering Fixed Rates as low as 3%. By far the standout Fixed Rate available is Ulster Banks 2 year 2.3% rate - their Variable Rates range from 3.6% to 4.4%. So, whats happening? Nothing other than the clearest indicator from Banks where they are expecting rates to go. There are two forces at play aside from the usual jitters 1. Potential Government intervention on rates. Supposedly FF have bill prepared to level Mortgage playing field, get rid of up-front gifts etc. There is widespread support for some form of action to lower rates. 2. New entrants to the market. Seemingly a number queued up in Central Bank gagging to get in here and enjoy supernormal margins to the rest of Europe.
Either way, there is a lower interest rate environment on the way. If opting for a Fixed Rate, take advice. Particularly over the longer term it may spell a time looking over the wall at those on Variable Rates and wishing! How low can they go, 2% seems a nice number, I'm predicting we will see it soon, certainly in 2019.