Irish mortgage rates reach lowest levels in years

Kenneth Fox

Irish mortgage rates fell to their lowest level in years September, according to new figures from the Central Bank.

This is in contrast to the rest of the Eurozone where rates have risen dramatically over the past six months.

Overall, Irish mortgage rates currently eighth lowest in Eurozone. At 2.58 per cent in September, the average interest rate on a new mortgage in Ireland was down from the 2.64 per cent rate recorded in August.

There was a significant 19 basis point rise in average Eurozone rate to 2.40 per cent. Ireland was also the only country to see its average rate fall in September compared to the previous month.

The average rate for a fixed-rate mortgage was 2.46 per cent while it was 3.78 per cent for a variable rate.

Ireland now has the eighth cheapest mortgage rates in the Eurozone, behind countries such as Germany, Belgium, the Netherlands, and even Finland, which until recently had the lowest rates in the Eurozone at well under 1 per cent.

The Central Bank said it should be noted that households in some of these countries tend to take out much longer-term fixed rates compared to Irish households (of up to 20 years or more) which usually have higher rates.

France once again has the lowest average mortgage rate in the Eurozone at 1.70 per cent, followed by Malta at 1.98 per cent.

Latvia has the highest rate at 3.90 per cent. The Eurozone average is 2.40 per cent, its highest level since at least August 2017, and over double the rate this time last year.

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.

“However we need to remember that rates in Ireland were comparatively high to begin with. Especially variable rates. Still, the slowness of the main lenders in passing on recent rate increases from the ECB is obviously welcome.

“Bank of Ireland and PTSB have yet to pass on any of the 2 per cent rate increase from the ECB to their non-tracker customers.

"Meanwhile, AIB has only increased its fixed rates by 0.50 of a percentage point. This increase only came into effect for new applications in the middle of October.

"Given the lag between applications and drawdowns, it won’t really show up in the Central Bank data until next year. So when the mortgage figures for October are released next month, Ireland could find itself having mortgage rates below the Eurozone average, which would be quite the turnaround.

“Unfortunately for homeowners and prospective homebuyers this situation is unlikely to last."

Mr Cassidy said the ECB has signalled that it will continue to raise rates over the coming months.

"It’s likely it will raise rates by 0.50 of a percentage point to 2.50 per cent when it next meets on December 15th and rates will likely reach 3 per cent in early 2023," he said.