Finance Ireland climbs down on move that threatened to scupper house-buying plans

This will allow them to avail of lower mortgages rates.

The lender shocked its customers when it announced mortgage rate rises of up to two percentage points last week, with immediate effect.

The move drew huge criticism as it threated to collapse deals to buy houses and meant that people attempting switching to Finance Ireland had to pull out as there was no value in such moves any more.

The large increases mean that some rates are set to be €300 a month more expensive.

Finance Ireland had said that only mortgages applications which have been approved and where a request to draw down had been received before the close of business on Friday, September 30, would avail of the lower rates.

If no request for a funds draw down was put in before that date the new higher rates would apply.

Finance Ireland has now climbed down.

It confirmed to brokers that it will apply a one-month notice period during which applicants with loan offers for a mortgage may draw down their loans at the lower rates.

The move will apply to customers who were in receipt of a formal loan offer on or before September 30 September and who draw down their loan by Friday October 28.

Mortgage broker Michael Dowling said the original decision of Finance Ireland to given no notice of the higher rates to those in the process of getting a mortgage from it to buy a home or execute a switch had caused “panic”.

He said this change of heart by Finance Ireland would help more people qualify for the rates before they were increased last week.

Leaders often give those in the process of drawing down a mortgage four weeks to get documents submitted before higher interest rates kick in.

The move to give those in the process of getting a mortgage from it no notice had led to people labelling the Finance Ireland decision “disgraceful”.

But the Central Bank had declined to comment on it when asked about the lack for notice of the higher rates for those in the process of getting a Finance Ireland mortgage.

Last week’s rate rises mean that a 20-year fixed rate mortgage will be priced from 4.6pc to 5pc, depending on loan-to-value percentage band.

A first-time buyer, yet to draw down, with a 90pc loan to value, will see the five-year fixed rate go from 3.95pc to 5.95pc, Mr Dowling said.

This will add around €300 to monthly payment.

Over a year this works out at an additional €3,600 in repayments.

Some rates for buy-to-let lenders will go to 6.8pc, rates that have not been seen in this market for a long time.

Mr Dowling said: “These are savage increases, and it appears that they are out of line with where rates are at the moment.”

It is the second time this year Finance Ireland has increased rates.