Now may be time to get a good fix

All mortgage cuts have now been implemented and borrowers can assume their repayments should remain constant, at least over the next month or two.

The huge reductions in mortgage rates which have been implemented over the past couple of months have almost halved many people's mortgage rate, if not the repayments. And there is certainly a case that borrowers should now think about fixing their rate, particularly if there is a large loan outstanding.

Martin Walsh, head of lending at EBS, which can once again claim most of the lowest rates, says fixed rates are unlikely to come down much further, if at all.

And there can be no doubt that is probably the case.

Fixed rates of 5.1 per cent for five years and 4.9 per cent for three years and less are probably the best that has been offered on the Irish mortgage market. They are also very low, even by continental European standards.

There can be large differences between one lender and another. Borrowers should also remember that the market is still so competitive that some haggling over rates is normal practice now in many banks and building society branches and many will match a competitor's lower rate. This can be particularly true if you are taking out a larger mortgage which will boost that branch's sales figures.

While the EBS's rates are almost invariably the cheapest, there are many borrowers for whom they are not an option. The building society has much tighter lending criteria than most of its competitors. Mortgages of three times income and above are almost unheard of.

Over the past year, by far and away the most popular mortgage for nearly all the lenders has been the one-year fixed rate or the one-year discounted variable rate. These made sense when rates were still expected to fall quite dramatically.

It is true that further rate cuts may be on the cards, depending on the performance of the global economy, and of course the state of play in Germany. But even if these materialise, they will be tiny in comparison with the 3.5 percentage points which were wiped off Irish rates since October.

This means that it may well make sense for anyone with a large mortgage to think about fixing. If your mortgage is so large that even one or two percentage point increases would make themselves felt, it is probably safer to fix.

At the moment, the best deals on the market include a three-year fix from ACC at 5.25 per cent, EBS at 4.9 per cent and 5.4 per cent at Irish Nationwide.

But existing customers at AIB, First Active, National Irish Bank and TSB all will be charged above 5.5 per cent, with NIB customers facing a 5.85 per cent rate. Most of the lenders also have reasonably attractive rates on offer over even longer periods. But the take up rate on these has been extremely low. This is mostly because of the huge penalties if the mortgage is repaid early. Most of the lenders point out that there are few people who can be sure that they will still be in the same house for 10 years or not have wanted to pay off any of their mortgage early. A 10-year loan can be obtained from AIB at 6.1 per cent, an historically very low rate.

Of course, there are still large numbers of people on variable rates and it is these which have the most chance of falling once again.

THESE rates vary greatly from lender to lender but they are probably the most important rate to look at when deciding whether to go with a lender. After all, it is the variable rate to which your fixed rate will eventually revert. You will probably spend far longer paying the variable rate than any special introductory offer.

At the moment, standard variable rates for existing customers vary from 5.1 per cent at EBS and 5.4 per cent at TSB to 5.95 at ACC and 6.1 at Irish Life Homeloans and National Irish Bank.

The battle for loans is also spilling over to the savers. Some of the lenders have so far avoided passing on all the cuts to savers. Rates of 3.5 per cent are still available from Irish Nationwide for three-month accounts, while EBS offers up to 4 per cent. However, after tax, these returns can be less than 3 per cent and as a result, many savers are now thinking about withdrawing their monies.

Irish Nationwide is to introduce a tracker bond next month as part of its weaponry to keep savers.

It is probably for this reason more than any other that some innovations are likely to be introduced to the mortgage market over the coming months, including new bonds and other ways of cutting rates to borrowers without affecting savers.