Irish mortgage rates fall below euro zone average

Tomas Doherty

Mortgage rates in Ireland fell below the euro zone average in October, according to the Central Bank.

It comes as the rest of the single currency area saw mortgage costs rise as the European Central Bank raised interest rates from 0 per cent to 2 per cent to combat runaway inflation.

The average interest rate on a new mortgage in Ireland was down slightly to 2.57 per cent in October.

Ireland now has the fifth-cheapest mortgage rates in the euro zone, behind countries such as Germany, Finland and Austria.

The main Irish banks were slow to pass on rate hikes initially but in October AIB was the first to move when it hiked all its fixed rates by 0.5 of a percentage point. The country's largest lender increased all its fixed rates by another half a percentage point at the end of November.

Tracker mortgage holders are likely see their repayments go up again in December when the ECB is predicted to raise its main lending rate from 2 per cent to 2.50 per cent at least.