{"id":274109,"date":"2026-01-08T13:13:09","date_gmt":"2026-01-08T13:13:09","guid":{"rendered":"https:\/\/www.europesays.com\/ie\/274109\/"},"modified":"2026-01-08T13:13:09","modified_gmt":"2026-01-08T13:13:09","slug":"what-is-in-store-for-borrowers-in-2026-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ie\/274109\/","title":{"rendered":"What is in store for borrowers in 2026? \u2013 The Irish Times"},"content":{"rendered":"

A shudder went through Ireland\u2019s ranks of mortgage holders on Tuesday as ICS Mortgages<\/a> announced a surprise increase<\/a> in its fixed rate offers for new borrowers. And the rise of up to 0.45 of a point was significant. But then on Wednesday Avant Money<\/a>, owned by Spain\u2019s Bankinter, said that it would be cutting rates<\/a> by up to 0.35 of a point and is now offering some of the better rates on the market, especially for borrowers with homes which lower BER ratings.<\/p>\n

So what on earth is going on? <\/p>\n

The background<\/p>\n

Up to late last year financial markets expected European Central Bank (ECB)<\/a> interest rates might decline a bit further this year, due to weak growth and low inflation. But before Christmas these expectations started to change. An increase in ECB growth forecasts and comments from influential executive board member Isabel Schnabel started to change the mood and even lead to talk of a rate rise some time in 2026.<\/p>\n

\"\"Ireland\u2019s record tax take makes light of Trump tariffs fear<\/p>\n

Now with inflation in December coming in at the ECB\u2019s 2 per cent target level, nerves have calmed a little. On balance, investors expect no change in ECB rates this year. Some even see an outside chance of another cut.<\/p>\n

This is some reassurance for borrowers, though we need to note that market expectations can change quickly enough and that in a volatile geopolitical environment unpredictable shocks can emerge to influence growth and inflation.<\/p>\n

For now, however, ECB rates are around a so-called neutral level \u2013 one that neither adds to or subtracts from economic growth. The central bank\u2019s president, Christine Lagarde, said after the December meeting that all options remain open \u2013 in other words steady rates, increases or decreases. But if inflation stays on target and EU growth ticks over, then ECB rates will stay where they are.<\/p>\n

The ICS move<\/p>\n

So why did the ICS increase its rates? Smaller lenders like ICS Mortgages, owned by Irish company Dilosk, often rely on money they borrow on the financial markets to fund the mortgages they lend. And because investors no longer expect ECB rates to fall further, these market \u2013 or wholesale- interest rates have edged higher, increasing the cost of funding to lenders like ICS.<\/p>\n

For example, three year \u201cswap\u201d rates \u2013 a measure of the cost of raising funds and hedging risk- rose from around 2.1 per cent in October to 2.4 per cent recently, before easing slightly as market nerves settled. ICS has also cut its rates in October \u2013 and may have moved too far at that stage.<\/p>\n

Spry Finance, which lends on an equity release basis to older borrowers basis \u2013 has announced a 0.2 per cent rise.<\/p>\n

Mortgage broker Michael Dowling said that this shows that banks that rely on the market to source funding, rather than customer deposits, do face the risk of having to adjust rates when the main players do not have to do so. Funding may also be an issue for Revolut, if it launches its mortgage product in Ireland this year.<\/p>\n

The Avant move <\/p>\n

Avant has made ground over the past couple of years \u2013 with a market share estimated at around 6 per cent \u2013 and its position was strengthened last April when it became a fully-fledged subsidiary of its Spanish parent. It is also starting to seek customer deposits in Ireland with some attractive offers to increase its funding options, as is a smaller player Moco, owned by Austrian bank Bawag. <\/p>\n

Avant\u2019s decision to cut mortgage rates again now by up to 0.35 of a point is aggressive, as is its doubling of its cash back offer to 2 per cent of the mortgage. With the two big banks offering lower rates on homes with a higher energy rating, Avant\u2019s rates compare well for those with lower ratings. It has a new product for mortgages over \u20ac300,000 with rates starting at 3.2 per cent, which, says Dowling, is the lowest non-green rate on the market. It is an encouraging sign for borrowers of a determination to win market share and put pressure on some of the bigger lenders. <\/p>\n

The main players <\/p>\n

The big banks \u2013 AIB<\/a>, Bank of Ireland<\/a> and PTSB <\/a>\u2013 which control the vast bulk of the market, have large holdings of customer deposits and pay little or no interest on a lot of them. This means that even if money market rates edge higher, they can keep interest rates at current levels and still maintain healthy margins between the rates at which they raise money and the rates at which they lend it out.<\/p>\n

The big lenders are \u201cawash with deposits\u201d, according to Dowling, and there is no reason to expect their rates to follow ICS higher. Whether they may trim rates in some areas to compete with each other and new entrants like Avant remains to be seen and will be closely watched. <\/p>\n

Much may depend here on what happens to PTSB, the bank in which the State has a majority stake which is currently up for sale. For consumers, the ideal outcome would be a purchase by a major EU bank with an interest in developing PTSB\u2019s 20 per cent market share. However, the small size and peculiarities of the Irish market mean the emergence of such a buyer is not guaranteed.<\/p>\n

The bottom line for borrowers<\/p>\n

What does it all mean for the various types of borrowers? For those on tracker rates \u2013 including many pre-2008 borrowers- it means the likelihood of more of the same in 2026. Their costs came down significantly from mid-2024 to mid-2025 as ECB rates tumbled but there is unlikely to be any further change in the short term. They can expect their repayments to remain broadly steady this year.<\/p>\n

For those on fixed rate loans, costs will of course remain the same until their fixed period runs out. Then it gets interesting. Those who took out loans before rates started to rise in the first part of 2022 would typically have fixed at around 2.5 \u2013 2.7 per cent. So a 2021 borrower rolling off a five year fixed rate this year will face an increase, though it would be much less than it would have been when rates were at their high in late 2023 and early 2024. <\/p>\n

Someone who took out a three year fixed rate in 2023, however, typically at rate of around 4.25 per cent will be likely to get a bit of a saving, if \u2013 as the market expects \u2013 rates remain roughly where they are in the months ahead.<\/p>\n

The variety of lenders and more importantly loan products with a wide variety of rates means research is essential and a mortgage broker will be worth consulting for many well before their fixed term is due to expire. There is no need to assume that you must just roll onto a new fixed rate with the first offer from your existing borrower. <\/p>\n

Research is also vital for new borrowers. Those buying new homes with high BER ratings are well served with offers from the main lenders, while there are also options for those buying second-hand with typically lower ratings. But there is a checklist that goes beyond this and covers issues such as whether additional or lump sum repayments can be made \u2013 which some may want the flexibility to do and where rules differ across the market. Cashback offers are not a good basis to make a decision \u2013 the rate is always more important \u2013 but can help to swing a tight call. <\/p>\n

But the calculus has changed from a year to eighteen months ago. Then, the risk was of locking in at too high a rate. Now, with mortgage rates unlikely to fall much further \u2013 though some competitive tweaks are possible \u2013 it is a question of finding the best rate on the market for you circumstances. When rates were at their height there was a case for new borrowers to go variable and see what happened, rather than lock in at high rates, some over 4.5 per cent. Now there is much less risk in locking in. <\/p>\n

Who knows what will happen in today\u2019s uncertain world. A big EU recession could send borrowing costs lower, for example, or a new inflationary squeeze on energy could send them up. But most likely for now is that ECB rates could stay roughly where they are for a prolonged period and so the mortgage market will be moved by competition, rather than by fundamental changes in the cost of money. Locking in at some of the better rates now on offer looks like a decent strategy, in the circumstances.<\/p>\n","protected":false},"excerpt":{"rendered":"A shudder went through Ireland\u2019s ranks of mortgage holders on Tuesday as ICS Mortgages announced a surprise increase…\n","protected":false},"author":2,"featured_media":274110,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[73],"tags":[624,76953,625,79,138287,18,89949,19,17,9650,37657,13083],"class_list":{"0":"post-274109","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-aib","9":"tag-avant-money","10":"tag-bank-of-ireland","11":"tag-business","12":"tag-dilosk","13":"tag-eire","14":"tag-ics-mortgages","15":"tag-ie","16":"tag-ireland","17":"tag-mortgages","18":"tag-ptsb","19":"tag-smart-money"},"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/274109","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=274109"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/274109\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/274110"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=274109"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=274109"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=274109"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}