Interest on variable rate mortgages falls
Published 14/05/2016 | 02:30
The interest rates charged to Irish homeowners are falling, with the controversially high variable rate mortgages seeing the biggest drops, new Central Bank data shows.
Over the past year there has been an outpouring of public anger over the level of interest charged by banks here, which is the highest in the eurozone and double the average in the common currency area.
That culminated in a commitment to tackle the issue being included in the Programme for Government published this week.
Consumer and political pressure, combined with banks' own access to ever cheaper finance, appears to have had some impact on prices over the past year. For variable rate mortgages, the average interest rate fell by 0.49 percentage points to 3.64pc over the year to the end of March.
That figure includes the wildly different costs of standard variable rate and tracker loans, however.
The data shows homeowners with a standard variable rate loan pay 3.93pc in interest on average - although new borrowers pay less.
It is twice the eurozone level and almost four times the 1.02pc interest rate for Irish borrowers with a tracker deal.
A typical standard variable rate mortgage customer here pays €2,500 more a year than their peers in the eurozone. But customers with trackers tied to the official ECB rate enjoy some of the cheapest debt servicing costs in the world.
Fixed rate loans are increasingly common, and typically cheaper than standard variable rate deals. For new customers the interest rate on loans fixed for less than three years is 3.59pc, and 3.77pc for those who fix for longer.