Irish mortgage rates remain steady amid rising Eurozone averages

Mortgage rates in Ireland steadied at 2.64 per cent in August, rising by just 0.01 per cent since July, according to newly released figures.

Average Irish rates are touching record lows, with the new figures showing Ireland outside the top five most expensive Eurozone countries for the first in five years.

Ireland's rate remains higher than the Eurozone average, however, which currently stands at 2.21 per cent. This is the highest average rate since August 2017, and double the average rate this time last year.

The average Irish rate for fixed-rate mortgages was 2.49 per cent and 3.77 per cent for a variable rate.

Ireland now has the eighth-highest mortgage rates in the Eurozone, behind countries such as Germany and the Netherlands. Households in these countries tend to take out much longer-term fixed rates compared to Irish households (of up to 20 years or more), however, which usually have higher rates.

Generally, rates are rising across the continent. Latvia has the highest average rate at 3.55 per cent, followed by Greece on 3.12 per cent and Estonia at 2.93 per cent.

France continues to have the lowest average mortgage rate in the Eurozone at 1.59 per cent, followed by Luxembourg at 2.00 per cent.

Commenting on the figures, Daragh Cassidy, Head of Communications at bonkers.ie said: "While rates have begun to shoot up elsewhere in Europe, they’ve remained remarkably steady here for now.

"Unfortunately for homeowners the ECB has signalled that it will continue to raise rates over the coming months. It’s almost a given that the ECB will raise rates by another 0.75 per cent to 2 per cent when it meets at the end of the month and rates may even reach close to 3% in early 2023. Most of this increase will eventually be passed on to mortgage customers. How much will somewhat depend on the competitive pressures the banks feel under.

“The main lenders (AIB, BOI and PTSB) have yet to pass on any of the previous 1.25 per cent ECB rate increase to their non-tracker customers, which is obviously welcome. Though some of their rates were extremely high to begin with anyway. However the smaller, non-bank lenders such as Avant Money, ICS Mortgages and Finance Ireland have raised their rates by over 2 per cent in some cases in recent months.

“Increasing rates will help take the froth out of the housing market but it won’t necessarily help first-time buyers as their repayments will increase. What’s more, all banks stress test mortgage applicants to see if they can cope with a future rise in interest rates. Some first-time buyers are now finding that they’re failing this stress test as rates go up," he said.