Approved Mortgage - ECB Implications

[Leesider32]

Hi all,

I have a offer letter from PTSB from July but of course since then we have seen 2 rate rises from the ECB. The house we are buying is in a new development and more than likely won't be ready until the start of November. In the small print of the offer letter they have that interest rates can change, my question is how much warning would they give you of this change happening if they were looking to pass on the ECB rate increases? If we have enough warning we could look at options to draw down the mortgage early.

 

[LDFerguson]

What interest rate is on your loan offer at the moment?

 

[Leesider32]

2.35%

 

[NoRegretsCoyote]

If we have enough warning we could look at options to draw down the mortgage early.

How would you do this? It's a while since I've bought a house but I always thought this was done simultaneously with the purchase. A bank won't lend unsecured at a mortgage rate.

I have a offer letter from PTSB from July but of course since then we have seen 2 rate rises from the ECB.

Irish banks (unlike every other country in Europe) have not increased rates very much this year (non-bank lenders in the market have increased them a lot though).

I have no idea whether this can continue, but the sooner you can draw down the better.

 

[Paul F]

How would you do this? It's a while since I've bought a house but I always thought this was done simultaneously with the purchase. A bank won't lend unsecured at a mortgage rate.

That's what I was thinking too. Would the developer sell you the unfinished house? Are they allowed to? Is it even a good idea? (How would you force them to finish it to an appropriate standard once you have paid for it?) Would PTSB even accept an unfinished house as security?

 

[Leesider32]

How would you do this? It's a while since I've bought a house but I always thought this was done simultaneously with the purchase. A bank won't lend unsecured at a mortgage rate.


Irish banks (unlike every other country in Europe) have not increased rates very much this year (non-bank lenders in the market have increased them a lot though).

I have no idea whether this can continue, but the sooner you can draw down the better.

If it is at the stage where a final valuation can be done then it is a possibility, to be honest haven't looked into the final detail yet as it was a brief discussion I had with my solicitor and really only want to go down this route if I have to.

Do you know how much notice the banks would give about a rate rise? That's my main concern at the moment.

 

[Paul F]

Do you know how much notice the banks would give about a rate rise?

I would expect them to give very little notice. They could announce it on a Friday and say that the rate increases take effect from the following Monday. But that's just a guess.

Edit: Or they could say that customers who have a loan offer must draw down by [specified date] to get the non-increased rate.

 

[Leesider32]

I would expect them to give very little notice. They could announce it on a Friday and say that the rate increases take effect from the following Monday. But that's just a guess.

Edit: Or they could say that customers who have a loan offer must draw down by [specified date] to get the non-increased rate.

Hoping there might be some notice alright for those with a loan offer. I have heard it used be 3 or 4 weeks but then the last rate rise was a long time ago so their processes may have changed!

 

[LDFerguson]

2.35%

Looks like a 4-year fixed rate. Fixed rates tend not to be as directly linked to current ECB rates as variable rates do. But the general consensus view is that rates are on an upward trajectory for the next while, so I'd expect fixed rates to rise soon too.

 

[NoRegretsCoyote]

Edit: Or they could say that customers who have a loan offer must draw down by [specified date] to get the non-increased rate.

I have read about this on a few threads.

Lender will give the applicant a deadline to complete or else rate goes up.

 

[DublinHead54]

How would you do this? It's a while since I've bought a house but I always thought this was done simultaneously with the purchase. A bank won't lend unsecured at a mortgage rate.


Irish banks (unlike every other country in Europe) have not increased rates very much this year (non-bank lenders in the market have increased them a lot though).

I have no idea whether this can continue, but the sooner you can draw down the better.

The two main Irish banks have signalled they are reviewing non-tracker mortgage pricing after the European Central Bank (ECB) unveiled a second large hike in its key rates in less than two months.

However, there appeared to be a reluctance in the industry to be the first to increase variable and new fixed-rate rates, even after some non-bank lenders hiked the cost of certain products in recent months.

Irish banks review non-tracker rates after ECB’s latest hike

Lenders appear reluctant to be first mover in raising variable and new fixed rates

www.irishtimes.com