Irish mortgage rates among cheapest in euro zone after surprising drop in February

Tomas Doherty

Irish mortgage rates dropped fractionally lower in February, according to new figures from the Central Bank of Ireland.

The average interest rate on a new mortgage was at 2.92 per cent in February, down from 2.93 per cent in January.

Ireland once again has the third-cheapest mortgage rates in the euro zone, and was among the few countries to see its rates fall.

The euro zone average rose to 3.33 per cent, almost three times it was around 18 months ago.

Daragh Cassidy, from mortgage comparison site bonkers.ie, said the figures show how the main banks have been slow to pass on European Central Bank rate increases to mortgage customers.

“Since last July, the ECB has hiked rates by 3.5 percentage points. However the main banks have only hiked their fixed rates by around 1.5 to 2 percentage points on average. And variable rates have hardly moved at all.

“However this generosity has largely come at the expense of savers. Savings rates in Ireland are still miserable. The best rate is just 1.5 per cent with Permanent TSB. And Bank of Ireland only pays a maximum of 0.75 per cent. However deposit rates over 3 per cent are now widely available in Europe.

“In essence, savers are now heavily subsidising mortgage holders. Whether that’s right will differ vastly depending on whether you talk to a mortgage holder or someone with big savings.”