Monday 22 October 2018

Irish mortgage rate rip-off? Home buyers here paying €2,200 more than Eurozone average

Mortgage rates vary across Europe but the average is 1.78pc
Mortgage rates vary across Europe but the average is 1.78pc

Charlie Weston Personal Finance Editor

Home buyers in this country are paying an additional €2,200 a year in mortgage payments than the average across the Eurozone.

New figures from the Central Bank show rates edged up slightly in June to an average of 3.23pc, the highest in the currency area.

Rates vary across Europe but the average is 1.78pc, according to the regulator.

Interest rates here mean the typical first-time buyer who is borrowing €250,000 over 30 years will pay an extra €188 a month compared with those on the continent. 

This works out at more than €2,200 over a year.

Daragh Cassidy of price comparison and switching website Bonkers.ie said borrowers here were getting very poor value.

“Over four years after the recession came to an end, the Irish mortgage rate rip-off continues.”

He said that despite the recent rate reductions from some of the main banks, Irish mortgage holders continue to pay more for their mortgage than any other country in the Eurozone.

And the gap seems to be getting bigger. 

Last month Ulster Bank and KBC cut fixed rates, but there has yet to be a reaction from AIB and Bank of Ireland, which between them control around 60pc of the mortgage market.

Mr Cassidy said: “A first-time buyer who takes out a mortgage of €250,000 in Ireland over 30 years would pay around €1,085 a month based on average rates.

“In Europe they would pay on average €897. So in Ireland we’re paying an extra €188 a month to the banks, or almost €68,000 extra over the lifetime of the mortgage. It’s infuriating.”

He advised first-time buyers to research the market.

A huge variety of rates and cash-back incentives are being offered across the different lenders.

“If you already have a mortgage, then look into switching. In recent times Irish mortgage holders have been reluctant to switch, which is crazy given the potential savings involved,” Mr Cassidy said.

The Central Bank figures show that almost half of new mortgage drawdowns for private homes in the April to June period were on fixed rates for more than three years.

Meanwhile, the regulator said that interest rates paid on new household term deposits fell in June.

Banks are paying just 0.05pc. This represented a 3 basis point decline over the year.

A rate of 0.05pc means someone with €10,000 on deposit will get just €5 in interest before tax after a year.

Equivalent euro area rates fell by 4 basis points over the same period, but remain marginally higher at 0.36pc.

Online Editors

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