Revealed: High mortgage rates here costing homeowners up to €60,000
HIGH mortgage rates in this country are costing borrowers up to €60,000.
The latest data from the Central Bank shows the average interest rate on new mortgages fell marginally in May.
But Irish rates are still the second highest in the Eurozone.
The interest rate on all new mortgages averaged 3.01pc in May, down two basis points on the previous month.
This compares with an average rate of just 1.68 for the euro area.
For a family with a €300,000 mortgage the difference in rates means extra payments of €60,000 over the 25-year life of the loan.
Chief executive of Brokers Ireland Diarmuid Kelly said: “Ireland is still 1.33pc higher than the euro area average.
“This 1.33pc higher interest rate on a €300,000 loan over 25 years is typically costing the Irish borrower €60,000 more over the lifetime of the mortgage.”
Mr Kelly said this means the monthly mortgage re-payment would be €200 more a month in Ireland than that of the same loan in the Eurozone.
Only Greece has more expensive mortgages.
Head of communications at price comparison site Bonkers.ie Daragh Cassidy said the slight fall in mortgage rates is welcome but it’s not enough.
“We continue to pay far higher rates than almost every other country in the Eurozone and have done for years. These higher-than-average rates, coupled with the continued rise in house prices, put added pressure on affordability for first-time buyers and make the dream of home ownership even harder to achieve.”
He said there was a lack of competition in the Irish mortgage market as it remains heavily concentrated in the hands of AIB and Bank of Ireland.
The latest confirmation of high mortgages rates here comes as the prospect of across-the-board cuts in mortgage rates has been raised.
It comes after Ulster Bank announced the first cut in its variable rate in more than a year.
And tracker and fixed rates could also be about to fall.
Expectations are now that the European Central Bank will cut its key rates, allowing banks to reprice their mortgage books.
This is in reaction to anaemic growth in the Eurozone and inflation falling.
Ulster Bank has dropped one of its key variable rates by 0.4pc to 3.9pc for those whose loan is less than 90pc of the property’s value.
A first-time buyer borrowing €225,000 will now save over €50 a month.
Although the Ulster Bank rate will still be considered very high, it is the first time in more than a year that a bank has cut variable rates.
Experts said this is likely to force other banks to cut variable rates, prompting a renewed mortgage price war.