Irish mortgage rates on the rise but remain among lowest in Euro zone

Muireann Duffy

Interest rate hikes from the European Central Bank (ECB) are starting to be felt in the Irish mortgages market, however, rates here remain the third lowest in the Euro zone.

The ECB has announced a number of increases for interest rates as part of efforts to tackle soaring inflation, the most recent of which was announced last Thursday, bringing the rate to 2.5 per cent.

According to the latest figures from the Irish Central Bank, these increases from the ECB are having a knock-on effect here, raising the average interest rate to 2.69 per cent in December from 2.57 per cent in November.

Despite this, the Irish figure remains below the Euro zone average of 2.95 per cent - the highest the rate has been since at least August 2017 and over double the rate from this time last year.

Malta had the lowest average interest rate for December (1.98 per cent), followed by France (2.12 per cent) and Ireland, while Latvia had the highest (4.65 per cent).

While Irish rates have increased month-on-month, Bonkers.ie's Daragh Cassidy highlighted that the figures are "exactly where they were in December 2021", despite the Euro zone rate more than doubling in the same timeframe.

"These figures show once again how slow the Irish banks were to pass on the ECB rate increases initially.

"However that is now changing," he warned, pointing to recent increases announced by Irish banks, including Bank of Ireland and AIB.

"Looking forward things don’t look great for those on tracker [mortgages], variable rates or who are looking to buy over the coming months," he said.

"The ECB is almost guaranteed to hike rates by another 0.50 percentage points when it meets in March and by another 0.25 percentage points before the end of summer. This will take the main lending rate to 3.75 per cent and mean yet more rate increases from all the lenders are guaranteed over the coming months."