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Irish mortgage rates back to being the most expensive in Eurozone

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Mortgages are expensive in this country.

Mortgages are expensive in this country.

Mortgages are expensive in this country.

IRELAND is back to having the most expensive new mortgage rates in the Eurozone.

Rates in January were more than double the average for the rest of the currency bloc, new figures from the Central Bank show.

The difference between Irish rates and the average in the Eurozone means homebuyers here are paying almost €190 extra a month compared with our European neighbours.

And the incentive for banks to cut rates is weakening with the confirmation that Ulster Bank is shutting down, experts said.

The average new mortgage rate in this country was 2.79pc in January.

Although this is down 13 basis points on January 2020 it is still the highest in the Eurozone

The average for the euro area stood at 1.29pc, although the rate varied considerably across countries.

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“Ireland had the highest mortgage interest rates across the euro area,” the Central Bank said.

In December, Greece had the distinction of having the most expensive home loans, but now Ireland has gone back on top of the league of shame.

Fixed rate mortgages accounted for 80p of new agreements over the month, according to the Central Bank’s ‘Retail Interest Rates: January 2021’ publication.

For new variable rate mortgages, the average interest rate was 3.35pc in January.

This was an increase of 14 basis points from the previous month.

The volume of new mortgage agreements was €500m in January.

This is a decrease of 7pc on January last year, and a 48pc reduction compared with last December.

Daragh Cassidy of price comparison site Bonkers.ie said for a €250,000 mortgage being repaid over 30 years, Irish homeowners are paying over €188 extra a month, or almost €68,000 over the 30 years.

“With Ulster Bank recently announcing its intention to leave the Republic, it’s unlikely things will improve much for homeowners in the short term at least.”

He said we need more competition in the banking sector but we also need to look at the rules around repossessions and capital requirements which make lending in Ireland so much more risky and expensive than elsewhere.

Lenders here blame tough European regulations on the amount of capital that has to be put aside when mortgages are issued for the high cost of home loans.

Mortgage issuers in Ireland are required to hold about three times more capital for the perceived higher risk in their mortgage loans books when compared with average capital requirements in Europe, according to a report commissioned by the Banking and Payments Federation Ireland.

The report also says the difficulty in repossessing property is another key reason for the high cost of mortgages here.

The average recovery rates at the end of enforcement through the judicial process is around 11pc in Ireland, compared with 46pc in Europe, the report found.


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