Wednesday, September 14, 2022

The average interest rate on a new mortgage in Ireland has fallen for the fourth month in a row.

The interest rate in July stood at 2.63 per cent, down from 2.68 per cent in June.

Ireland, along with Malta and Greece, were the only countries in the Eurozone to see a fall in their mortgage rates. All other countries saw a rise in their average rate, some of which were significant.

France again has the lowest average mortgage rate in the Eurozone at 1.45 per cent, followed by Austria at 1.79 per cent.

However, around this time last year Finland had the lowest rate at just 0.69 per cent, underlying just how much rates have begun to rise in recent months.

The Eurozone average is 2.08 per cent, its highest level since at least August 2017.

By contrast, the average Irish mortgage rate is at its lowest since at least the same time and is now the fourth highest in the eurozone. This is the first time in over two years that Ireland hasn’t been within the top three most expensive countries.

Daragh Cassidy, Head of Communications at bonkers.ie says: “It seems we finally have European-level mortgage rates – just not in the way we had hoped for.

“Rates in Germany (2.87 per cent) are now higher than they are in Ireland, which no one would have predicted a few months ago.

“Unfortunately for homeowners the ECB has signalled that it will continue to raise rates over the coming months. It’s likely that the ECB will raise rates to around 2 per cent before the end of the year and they may even go close to 3 per cent in 2023. Most of this increase will eventually be passed on to mortgage customers. How much depends on the competitive pressures the banks feel under.

“The main lenders have yet to pass on any of the 1.25 per cent rate increase to their customers which is obviously welcome. Though some of the smaller, non-bank lenders such as Avant Money and Finance Ireland certainly have.

“Anyone on a variable rate should seriously consider locking into a longer-term fixed rate. Regardless of how high the ECB eventually raises rates, variable rates are generally poorly priced compared to fixed rates already.

“Anyone on a tracker needs to get expert advice to assess their options – depending on how high rates go, and the margin you’re paying, moving off a tracker may or may not make sense.

“For those who are concerned about rising inflation and the cost of living, switching your mortgage is a really effective way to put money back into your pocket. Record numbers of people are now switching their mortgage and I’d encourage every homeowner to look into seeing what they could save. For example, right now if you’re paying an interest rate of 4 per cent and have €200,000 and 20 years remaining on your mortgage, you could save over €225 a month if you switched to a 2.20 per cent fixed rate.”

Comments are closed.

Contact Newsdesk: +353 59 9170100

More National News

What the papers say: Wednesday’s front pages