Recent Central Bank of Ireland data shows that around 82,000 customers currently hold mortgages with Credit Servicers or Non-Lending Retail Credit Firms. Many of these customers are continuing to make repayments on tracker or standard variable rate loans, and up until the middle of last year, had been benefiting from historically low interest rates.
However, in 2023, the landscape for mortgage holders changed dramatically. The European Central Bank increased its base lending rate to 4.00%, making monthly repayments substantially more expensive for Irish mortgage holders with variable rate mortgages. According to the ECB further increases are very likely in July 2023.
This has resulted in a situation where variable rate mortgage customers, many of whom are paying in excess of 7%, have no certainty over their future mortgage costs.
Switching to a Lifetime Loan while not suitable for everyone, is a potential option for some as it can provide certainty over interest rates and help manage payments for those who are eligible. Eligibility is primarily based on a customer’s age (customers must be aged over 60), the value of their property and the equity remaining in their property. As payments are optional, the ability to make repayments and previous credit issues are not a barrier to Lifetime Loans in the same way as they may be for standard mortgages. With no upper age limit, Lifetime Loans provide real choice for those in later life.