Homeowners here still paying more for mortgages than other countries in euro area
Homeowners here continue to pay more than the typical cost for a mortgage in the other countries in the euro area.
A lack of competition in the banking market has been blamed.
New figures from the Central Bank show that home buyers paid an average interest rate on new mortgages agreed in October of 3.06pc, compared with an EU average of 1.77pc.
The regulator had originally put out a figure of 3.14pc for the average new mortgage rate in October.
When questioned by this publication, it admitted this was an error.
“That [3.14pc] figure is incorrect and will be corrected. It should be 3.06pc instead of 3.14pc,” the Central Bank.
The average interest rate in September was 3.08pc, which means that rates have gone down ever so slightly.
Last month European Central Bank president Mario Draghi, speaking in Dublin, blamed a “quasi-monopoly” among banks here for the high rates. AIB and Bank of Ireland dominate the market.
Calculations based on the Central Bank mean a typical new buyer is paying almost €157 more for their mortgage each month compared with the average in the Eurozone.
Over a year this works out at almost €1,900 a year more being paid here by a typical new borrower than in the rest of the euro currency area, according to calculations by price comparison site Bonker.ie.
The latest mortgage cost figures come as Fianna Fáil representatives met with Central Bank officials to discuss ways to tighten rules for variable mortgage interest rates, as part of a new Confidence and Supply deal with Fine Gael.
The party is now demanding new laws to limit hikes to variable mortgage rates be introduced in return for propping up Taoiseach Leo Varadkar's Government.
The Central Bank previously said that interest rates are “subject to existing contracts and contract law”. It also said it was concerned about the Central Bank's statutory functions to “encompass the regulation of competition”
It is understood the Central Bank may be more open to new rules if the Dáil defines the actual cap on mortgage rates or clearly set out a methodology under which a cap could be deciphered.
A revised bill will also seek to clampdown on cash back offers which some banks use to attract first-time buyers on the grounds that such deals camouflage higher rates.
Fianna Fáil’s finance spokesman Michael McGrath confirmed to the Irish Independent that tackling mortgages is a key priority for the party in the year ahead.