Irish mortgage rates reach their highest level in three years

Kenneth Fox

Irish mortgage rates shot up in January, according to new figures from the Central Bank of Ireland on Wednesday.

At 2.93 per cent in January, the average interest rate on a new mortgage in Ireland rose from 2.69 per cent in December. This leaves rates at their highest level since October 2019.

Despite the big jump, Ireland continues to have among the cheapest mortgage rates in the Eurozone, for now at least, with only France and Malta recording lower rates than Ireland in January.

The Eurozone average rose to 3.16 per cent, well over double the rate compared to this time last year.

Commenting on the news, Daragh Cassidy, Head of Communications at bonkers.ie says: “Over the past few months all the lenders have hiked their mortgage rates in response to increases by the ECB. And these hikes are now beginning to show up in the Central Bank monthly figures.

“Initially the banks were slow to pass on the ECB rate hikes, but this is now starting to change. And the average rate will shoot much higher over the next few months.

“Only yesterday Permanent TSB hiked its fixed rates for the third time since November, which leaves many of its rates for the average first-time buyer at over 4.50 per cent.

He said looking forward things do not look great for those on trackers, variable rates or people who are looking to buy over the coming months.

“The ECB is almost guaranteed to hike rates by another 0.50 percentage points next week and by at least another 0.25 percentage points before the end of this summer. This will take the main lending rate to 3.75 per cent, though it looks increasingly likely that it will go even higher. This means yet more rate increases from all the lenders are guaranteed over the coming months.

“Up until the middle of last year, it was possible to get a mortgage rate as low as 1.90 per cent in Ireland - albeit with several caveats. By the end of the year, the cheapest rate is likely to be over 5 per cent, with the average rate even higher. The impact this will have on affordability will be huge.

“For example, borrowing €300,000 over 30 years at 5 per cent will cost €1,610 a month or around €500 more each month compared to someone borrowing the same amount at 1.90 per cent. Borrowing €300,000 at 6 per cent will cost almost €1,800 a month or around €700 extra each month," he said.