Our fixed-rate loan at PTSB is coming to an end and we are looking at our options. We have been advised that we should get a valuation on our home but I am not sure why.
Is it a good idea? Why? Can you give us some guidance on our options when the fixed term ends?
SC
You are not alone. Almost 50,000 households are expected to come to the end of their fixed mortgage terms this year and next. The timing is less than perfect.
READ MORE
Five years ago, European Central Bank (ECB) interest rates were at historic lows. They rose dramatically after that, with the ECB, which sets the ground for what happens to rates available to Irish mortgage holders, announcing 10 increases in succession, bringing rates from 0 per cent to 4.5 per cent by September 2024.
Eight subsequent rate cuts between June 2024 and June 2025 did bring ECB rates back down to 2.15 per cent before concern about inflation saw them raised again in June this year to 2.4 per cent as it moved to tackle inflation.
For homeowners, the impact shows in data published monthly by the Central Bank. The average rate on a new fixed-term mortgage contract in May 2021 was 2.64 per cent; by May this year – the latest month for which data is available – that had risen to 3.44 per cent.
So anyone coming off a five-year fixed rate – which I think might be the most common for people buying a home – is inevitably facing an increase in interest rates.
However, fixed rates are still comfortably better value than variable rates. And with a very uncertain outlook – not least because of Donald Trump’s on-again, off-again war with Iran and its impact on oil supplies – most analysts expect rates to rise from here rather than fall again, so waiting for better news might not be the best plan.
However, there are things you can do to make the best of a less-than-ideal situation and that brings us to the question about your valuation.
I think it makes sense to get one, and here’s why.
Better interest rates are available to you if the size of your mortgage loan is less than 80 per cent of the value of your home.
The main reason for getting the valuation is where the bank might think you are still at a loan-to-value that does not entitle you to a better rate. In the absence of proof to the contrary, they regard the property value as the price you paid, which is on their files.
You don’t tell me the size of your mortgage or how it compared with the price of your home when you bought it but most people start out taking an 80 per cent loan – unless they are a first-time buyer, in which case it could be as high as 90 per cent.
As time goes by and you pay back some of the loan, that percentage will fall. And hopefully the market value of your home is also rising. It certainly has been over the last five years.
Below 80 per cent loan-to-value, better rates are available. Depending on the lender, below either 60 per cent or 50 per cent, they are better again. Getting a valuation gives you the evidence of how your outstanding mortgage measures up against the updated value of your home – and hopefully access to a lower interest rate.
And in the general scheme of things, valuations are not expensive. Your lender may have a pool of people they use for the purpose; otherwise most estate agents will provide a formal valuation for a fee of €200 or less.
That’s not all. Since you last fixed your mortgage, there has been significant growth in what are called green mortgage rates. As a general rule, these are available to homeowners whose properties have a Ber – a building energy rating – of B3 or better, with A1 being the best.
Check your Ber certificate, which hopefully is in your house file. You’ll have to have provided this when you first got your mortgage.
If you have got work done on your home since then to improve its energy efficiency – insulation, new windows and/or doors, solar panels or a heat pump – you need to get a new Ber certificate for an accurate read on the property. Again, this will cost. You can expect to pay between €200 and €300 for a standard estate home.
New Central Bank rules also make things easier for hard-pressed homeowners. Last time you fixed, it was up to you to dig out the best rate available. The bank said only that at the end of your fixed term, you would revert to its standard variable rate.
Now lenders must actively notify you 60 days before your fixed rate ends of the best rates they have available, breaking down into euro what each of those options mean for your monthly repayment.
Again, they will work off the figures they have for the equity in your home. An updated valuation will lead them to crunch the numbers again for you.
So what are your options when it comes to your next move after this fixed term expires?
In the absence of precise figures, I am going to assume your loan to value is now under 80 per cent but above 60 per cent given your repayments and rising property prices.
PTSB rates
Sticking with PTSB, they offer three separate rates – and that’s before you even get to green rates. First up is the lowest, the rate available to new customers but that will not be available to you. As always when it comes to Irish banks and utilities, loyalty does not pay any dividend for the customer.
Then you have a rate for mortgages of less than €250,000 and another (better) one for mortgages where the outstanding balance is above €250,000.
The headline rates can be misleading so you do also need to compare annual percentage rate of charge (APRCs), which include other fees that can impact the full cost of your loan.
For a mortgage of more than €250,000, you can currently get a rate of 3.55 per cent fixed for three years (APRC of 4.29 per cent) or 3.45 per cent over five years (4.08 per cent APRC).
A wider range of rates is available for smaller mortgages, albeit at inferior rates.
They are 4.2 per cent for a two-year fix (4.53 per cent APRC), 3.75 per cent for three years (4.35 per cent APRC), 3.6 per cent over five years (4.15 per cent APRC) and even a seven-year fix at 3.45 per cent (3.92 per cent APRC).
Those all compare with a variable rate at PTSB of 4.5 per cent.
If you qualify for a green rate, they tend to be a 20th to a 10th lower, so 3.5 per cent over three years and 3.35 per cent over five for those with larger loans, and 3.55 per cent 3.45 per cent for three and five year loans respectively where the balance is less than €250,000. Again, look at the APRCs.
Options elsewhere
The alternative to staying with PTSB is to move to another lender, such as the other big banks or other lenders such as Avant Money, EBS, Haven Mortgages, ICS Mortgages, MoCo, Nua or the credit unions.
While the PTSB rates are not that bad, there are better rates available in the market.
For instance, AIB is offering a three-year green fix at 3.1 per cent (3.86 per cent APRC) at the moment. And its non-green rate of 3.6 per cent, though higher than PTSB in headline terms, is actually lower when you look at its APRC of 4.09 per cent.
Bank of Ireland offers four-year green fixes of between 3.1 and 3.15 per cent depending on your Ber (3.8 per cent APRC).
If you do consider switching, you will need an updated valuation anyway for any new lender. And you will also have to allow for legal fees. These are not extortionate – at up to €2,000 in general – but they may eat up any benefit your wallet might expect from a slightly lower rate over three or five years.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com with a contact phone number. This column is a reader service and is not intended to replace professional advice
