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Irish mortgage rates now cheaper than Eurozone average but increases are coming

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MORTGAGE interest rates in this country stayed at record lows in November, with this country having the third cheaper rates in the Eurozone.

Rates here are now lower than the average for the currency zone for the second month in a row.

But the record lows are not expected to last after AIB, Bank of Ireland and Permanent TSB all hiked their fixed rates in recent months.

The average rate on a new mortgage in this country was 2.57pc in November, unchanged from the previous month, according to Central Bank of Ireland figures.

The fact that rates did not change here in the month is in contrast to the rest of the Eurozone where they increased by 0.19 percentage points.

Ireland now has the third cheapest mortgage rates in the Eurozone, behind Germany, Belgium, the Netherlands, and even Finland.

But lending rates for home buying in this country are now lower than the average for the currency zone.

The Eurozone average is 2.84pc, its highest level since at least August 2017, and over double the rate this time last year.

France once again has the lowest average mortgage rate in the Eurozone at 1.97pc while Latvia has the highest rate at 4.57pc.

Ireland and Greece were the only countries in the Eurozone not to see their mortgage rates rise compared to the previous month.

November is likely to mark the lowest point in the current mortgage rate cycle for Ireland for several years to come, according to Daragh Cassidy of price comparison site Bonkers.ie.

In the last two months AIB has increased its fixed rates by 1 percentage point, with Permanent TSB raising its fixed rates by up to 0.90 percentage points.

Bank of Ireland has hiked its fixed rates by 0.25 percentage points.

Avant Money has hiked its rates by up to 1 percentage point.

There have been four hikes in the European Central Bank (ECB) main lending rates, with up to three more rises expected this year.

The key ECB refinancing rate, which tracker mortgages are priced off, has gone from 0pc in July to 2.5pc.

Mr Cassidy said this meant that more hikes from all lenders are likely to follow over the coming weeks.

He said the cheapest rate for a first-time buyer with a 10pc deposit who applies for a mortgage right now is 2.85pc with Permanent TSB.

New buyers can get 3.15pc from AIB, and 3.40pc with Avant Money.

All of these lending rates are above the figures produced for November by the Central Bank for average new mortgage rates in this country.

Mr Cassidy said: “I don't think anyone had in their forecasts that Ireland was going to have among the cheapest mortgage rates in the Eurozone. Not least the third lowest.”

But he said this is unlikely to be the case for much longer.

“Over the past two to three months there have been big rate hike announcements from AIB, Avant Money, Bank of Ireland and PTSB. These hikes will all start feeding through into the Central Bank figures over the coming months.”

People on tracker rates, who are being hit with successive rises in their monthly repayments, have been told to seek financial advice before ditching their trackers for a fixed rate.


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