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Mortgage lending falls 48pc to seven-year low

Interest rates on home loans start to rise after falling for months

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Mortgage lending crashed to a seven-year low in May, as property transaction activity seized up due to the coronavirus lockdown (stock image)

Mortgage lending crashed to a seven-year low in May, as property transaction activity seized up due to the coronavirus lockdown (stock image)

Mortgage lending crashed to a seven-year low in May, as property transaction activity seized up due to the coronavirus lockdown (stock image)

Mortgage lending crashed to a seven-year low in May, as property transaction activity seized up due to the coronavirus lockdown.

Just €377m was borrowed to buy homes, a fall of 48pc compared to May 2019.

The Central Bank said it was the largest year-on-year decline since the data series began in 2013.

It comes after what was, until now, a record fall in April that saw a 40pc drop in new mortgage lending in that month to €407m.

And the Central Bank report shows that interest rates on residential mortgages have begun to creep up again, after months of decreases.

The average rate on a new home loan was 2.87pc in May, up 9 basis points on the previous month. The average for the eurozone stood at just 1.32pc.

Ireland now has the fourth-highest mortgage rates in the eurozone after Latvia, Greece and Estonia, according to the latest Retail Interest Rates report from the Central Bank.

Brokers Ireland said mortgage holders in this country are paying far more than the average paid by their eurozone counterparts.

The differential costs Irish consumers more than €84,000 on a €300,000 mortgage over 30 years, Brokers Ireland said.

The director of financial services at Brokers Ireland, Rachel McGovern, said more existing mortgage holders are switching to get better rates, but not enough are doing this.

"There are tremendous savings to be got by doing so, and lenders are now encouraging switching, seeing it as an area in which to compete for people with good repayment capacity."

Ms McGovern encouraged people to review their mortgages.

"There are large savings to be made and the switching process has become easier, unlike in the past," she said.

New variable mortgage rates stood at 3.37pc in May.

The average rate on new fixed rate agreements stood at 2.74pc, an increase of 4 basis points on April.

Fixed-rate mortgages accounted for almost three-quarters of all new agreements in the three months to May.

New consumer lending contracted by more than 50pc in May versus the same month in 2019.

It was the second consecutive month of a fall on this scale.

Just €82m was taken out in personal and other small loans in May 2020.

This represents a decline of €114m, or 58pc, on the same month a year ago.

The average interest rate on consumer loans was 7.27pc versus 5.12pc in the eurozone, the Central Bank said.

Irish Independent