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Call for banks to cut mortgage rates as new figures reveal expense of Ireland's home loans

Borrowers here are paying €150 more a month on average than rest of Eurozone


Stock: Getty Images

Stock: Getty Images

Stock: Getty Images

Banks have been called on to cut their mortgage rates after new figures again showed this country has some of the most expensive home loans in Europe.

The call came as evidence has mounted that the European Central Bank (ECB) is years away from starting to raise the interest rate it charges banks.

The ECB’s key lending interest is 0pc and it could be two years before it increases.

But the latest figures from the Central Bank show that Ireland continued to have the second highest interest rate on new mortgages in December.

The average rate of 3.03pc here is the second highest in the Eurozone, with only banks in Greece charging more.

Across the Eurozone as a whole the average rate is 1.77pc.

This means borrowers here are paying €150 more a month on average than mortgage holders in the rest of the currency bloc.

The average interest rate on new variable rate mortgages in this country was 3.27pc in December.  This was a decrease of 1 basis point on the previous month.

The average fixed rate also decreased by 1 basis point on the month in December, to 2.93pc.

Attempts by banks to compete with each other by cutting fixed rates last year meant the average fix was down 24 basis points to 3.03pc in 2018, compared with the previous year.

The fact that any rise in ECB rates is now a long way off means banks here should continue to reduce their mortgage rates, Daragh Cassidy of price comparison site Bonkers.ie said.

“Banks should continue to focus on reducing their rates and offering better value to consumers.

“In fact, only last week we saw Bank of Ireland actually increase their longer-term fixed rates, which was deeply disappointing given how expensive these rate already are in Ireland,” Mr Cassidy said. 

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He said that although the trend of falling mortgage rates is welcome, we should not lose sight of the fact that we continue to pay higher rates than every other country in the Eurozone apart from debt-ridden Greece.

The average first-time buyer mortgage in Ireland is now just over €225,000. This means a first-time buyer in Ireland who takes out a mortgage of this size over 30 years would pay €952 a month based on average rates.

In the Eurozone they would pay on average €806. Mr Cassidy said this means first-time buyers here are paying over €146 more a month.

“For those who already have a mortgage they should always look at their options for switching.

“New business rates are as low as 2.30pc now, meaning someone who switches a €250,000 mortgage could save around €250 a month if they’re currently on a 4.5pc rate,” Mr Cassidy said.

Fixed rate mortgages now account for 68pc of all new agreements, the Central Bank said.

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