‘Homeowners should consider fixing rate’

Bank of Ireland’s treasury chief says it’s a good time for a lock-in deal, with rates tipped to rise within year. Michael Cogley reports

MORTGAGE holders should “at least consider” locking in their variable rate mortgages ahead of looming interest rate rises by financial regulators, the head of Bank of Ireland’s treasury and markets division has said.

The European Central Bank has shelved plans for an interest rate rise until next summer at least, but both the Bank of England and the US Federal Reserve have begun moving their rates back towards pre-crisis levels.

Speaking to the Sunday Independent, Sean Crowe, inset, said that it was only a matter of time before rates began to creep up in Ireland also.

“We’ve had low, low interest rates for 10 years now, abnormally low. That was necessary after the financial crisis because there was too much debt out there,” he said. “Debt in our economy has dropped remarkably and it was the same in the US, it was the same in Europe and when you look at the kind of growth we’ve seen over the last few years, the need for low interest rates is a lot less prevalent than what it was.” Crowe said that while he wasn’t expecting increases “in the morning”, the markets have predicted a rate rise within the year. “Everybody should think about locking it in, but it depends on what else is going on. If you’re a mortgage holder, there is protection in locking in for a number of years. “But if you have a slightly different view, if you wanted to move house soon in three years time, you won’t need a five-year fixed rate. It’s the same for companies. It seems sensible to at least consider locking in long-term rates, but every individual needs to look at it. For me personally, I think it’s a good time to lock in.” The Bank of Ireland markets chief also said that non-performing loans were reducing at a dramatic pace thanks to the recovering economy, but did not rule out a sale. “It would be foolish to rule it out, but there’s nothing imminent from us,” he said.