Lenders called on to cut high mortgage rates
Published 12/08/2014 | 02:30
BANKS have been called on to cut variable mortgage rates after it emerged Ireland has higher home-loan lending rates than the average in the eurozone.
Head of the Irish Brokers Association Ciaran Phelan said lenders should not abuse the situation where there is little competition in the banking market.
He said banks should reduce mortgage rates for first-time buyers and for existing mortgage holders on high variable rates.
Around 200,000 existing mortgage holders are variable rates averaging 4.5pc.
This is almost five times higher than the typical tracker rate.
The gap in monthly repayments between someone with a tracker and someone on a variable, for the same sized mortgage, is now more than €300 a month.
Mr Phelan said: "The European Central Bank main rate has never been lower. So why then have new figures from the Central Bank revealed that the interest rates on new loan agreements to households for house purchase, with either a floating rate or initial rate fixation of up to one year are some 0.51pc higher than the equivalent euro area rate?"
He said there were thousands of potential new buyers waiting to enter the market. "Our message is quite simple - we want the banks to reduce their rates to promote a fairer and more competitive market for those looking for new mortgages.
"Lower rates mean more affordable repayments and greater spending power in the rest of the economy."
Before the financial crash in 2008, mortgage interest rates here were closely aligned to the ECB lending rate. But since the financial collapse banks have hiked up variable rates for new and existing mortgage holders.
The Irish Banking Federation said new mortgage lending rates are higher than the average in the eurozone, with some countries having higher rates.