FIXED OR VARIABLE RATE?

To fix or not to fix? The question may not have exercised Shakespeare, but it is very much in the minds of buyers.

According to the Central Bank, fixed rates (FR) accounted for 56pc of new mortgages in the last three months of 2017.

Traditionally FRs were higher than standard variables (SVR) — a lender’s cushion in case rates hiked during the term.

However, with money for nothing — literally, lenders are borrowing centrally at 0pc — this has resulted in “locking-in” borrowers instead, so attractive FRs are all the rage. But they are still double what Europeans are paying. The average SVR is 3.25pc, while in the EU it’s 1.83pc.

McCartney says this can be explained: “Our interest rates are elevated for a reason. SVRs are subsidising trackers, and there is a huge difficulty in banks getting hold of assets if a loan defaults, so it’s factored into the price. Rates on secured assets are always lower than unsecured ones, but with mortgages, in practice, it is very hard to repossess.”

Joey Sheahan, head of credit at MyMortgages.ie, says first-time buyers can get a head start by keeping their nose clean financially — starting at least three months out, six months to be sure.

“You might only get one bite at the cherry with a lender,” he says, “so it’s crucial you put your best foot forward. Before they will give consideration to a mortgage application, a bank will look at the applicant’s credit history and recent banking history. Ultimately what they are looking for is a capacity to repay, on the evidence of past behaviour.

There are a number of red flags that will put a lender off, in part or perhaps in full; applicants must ensure these are not raised on their application.

These include overdrafts — authorised or otherwise, online gambling, cash advances on credit cards, even on holidays, non-documentation of rent, erratic or irregular saving or spending patterns.”