Irish mortgage interest rates joint highest in euro zone
Ireland and Greece had the joint highest mortgage interest rates across the euro area in November, new figures from the Central Bank show.
The Central Bank said the average interest rate on new mortgages in Ireland stood at 2.79% in November.
This compared to the average for the euro area of 1.31% in November, although the rate varied considerably across countries, the Central Bank said.
Today’s figures show that the average interest rate on new fixed rate mortgages was unchanged at 2.67% in November, while the average rate for new variable rate mortgage agreements stood at 3.32%, a decrease of four basis points from October.
The Central Bank said the volume of new mortgage agreements amounted to €822m in November, an increase of 1% on the same time last year and a rise of 10% when compared with the previous month.
A total of €668m was agreed in new fixed rate mortgages and €154m in variable rate mortgages in November, it added.
The Central Bank also said today that the average interest rate on consumer loans stood at 7.61% in November, compared to the equivalent euro area rate of 5.22%.
New consumer lending agreements – including renegotiations – stood at €121m in November, a drop of 35% on November 2019.
Meanwhile, interest rates on household overnight deposits, which account for the largest share of household deposits, dropped from 0.04% to 0.03% in November.
Commenting on the figures, Daragh Cassidy, Head of Communications at comparison and switching website bonkers.ie said it is tough to accept that rates here should be over double the Eurozone average.
Mr Cassidy said he would encourage those starting their mortgage journey to do their research and shop around.
“There’s now a huge variation in interest rates and cashback incentives across all the different lenders; so find out who’s offering the best deal for you.
“While the average new mortgage rate in Ireland is still close to 3%, there are now rates as low as 2.30% on offer for standard first-time buyers with a 10% deposit – even lower if you have more equity to stump up,” he said.
Mr Cassidy also advised current mortgage holders to look into switching.
“In recent times Irish mortgage holders have been reluctant to switch, which is crazy given the potential savings involved.
“Many lenders now have dedicated switch teams in place to make the process as easy as possible and it often won’t be as much hassle as people think it might,” he said.
While there are costs associated with switching mortgage provider, Mr Cassidy said that in many cases, banks will provide a sizeable cashback incentive to those who switch or a contribution towards the legal fees.
“If you have €250,000 outstanding on your mortgage with 20 years remaining, and are paying an interest rate of 4% or above, you will save over €200 a month on your repayments,” he said.
The mortgage market in 2021 is likely to experience material growth over 2020, according to Trevor Grant, Chairperson of the Association of Irish Mortgage Advisors.
“A large percentage of potential house purchasers working in the tech, pharma or financial services industries have been financially unaffected by Covid.
“As we start the year, there is high demand from applicants looking to secure a 2021 loan to value or income exemption, but, as always, these will be issued sparingly by the banks in line with Central Bank rules,” he added.