New data released from the Central Bank reveals that mortgage rates in Ireland have surpassed the average rates in the Eurozone.
This follows the eighth consecutive increase in interest rates by the European Central Bank last month. In May alone, the average interest rate for new mortgages in Ireland stood at 3.84%, up from 3.63% in April.
Comparatively, the Eurozone average mortgage rate rose by 12 basis points to 3.7%, a significant jump from 1.76% in May of the previous year and nearly triple the rate in 2020.
All Eurozone countries experienced a rise in mortgage rates, with the exception of Malta, which currently boasts the lowest rate in the bloc at 1.73%. The Central Bank’s revised figures show that interest rates have been steadily increasing since November of the previous year, with the February rate revised upward from 2.92% to 2.98%.
Daragh Cassidy, (head of communications at property giant bonkers.ie), made a comment on the figures, stating that
“the recent increases in mortgage rates were expected”
“However our mortgage rates are still among the lowest in the Eurozone. For now at least,” he said.
“This is because the main banks have been so slow at passing on the full brunt of the ECB rate increases to their mortgage customers.”
However, he noted that Irish mortgage rates still remain relatively low compared to other Eurozone countries due to the slow response of major banks in passing on the full impact of European Central Banks (ECB) rate increase to their mortgage customers.
He went on to predict a further 0.25 percentage point increase at the next ECB meeting towards the end of the month.
Cassidy also highlighted that the relatively lower mortgage rates in Ireland have come at the expense of savers, as savings rates in the country remain poor and inflation continues to rise.
While Irish banks offer a maximum rate of 2% from AIB and 1.5% from Bank of Ireland and PTSB, some European banks now provide deposit rates exceeding 3.60%.
Cassidy emphasised that rates are expected to continue rising, cautioning prospective mortgage holders and those on trackers to be prepared. He anticipates that the ECB’s main lending rate, which affects trackers and mortgage rates, could reach 4.25% at the end of the month and possibly rise to 4.50% in September.
As a result, tracker customers could soon be paying around 5.60% or 5.70%, while the best rate for first-time buyers might exceed 5% by the year’s end.
To navigate these developments, Cassidy advised individuals on trackers, variable rates, or approaching the end of their fixed-rate period to consult a mortgage broker to assess their options before rates climb further.
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