New data from the Central Bank of Ireland released yesterday shows that Ireland continues to have among the highest mortgage rates in the Eurozone, however, the gap between rates in Ireland and the rest of Europe has closed hugely over the past few months.
At 2.68% in June, the average interest rate on a new mortgage in Ireland is second only to Greece in the 19-country Eurozone. However, this is down from 2.73% in May and 2.77% in April. For the second month in a row, Ireland was the only country in the Eurozone to see a fall in its mortgage rates. All other countries saw a rise in their average rate, some of which were significant.
The Eurozone average is 1.90%, its highest level since at least August 2017. By contrast, the average Irish mortgage rate is at its lowest since at least the same time.
Commenting on the figures this week, Head of Communications at bonkers.ie, Daragh Cassidy said, "Unfortunately for homeowners the ECB has signalled that it will continue to raise rates over the coming months. It’s likely that the ECB will raise rates to at least 1% before the end of the year and they may even hit 2% or more in 2023. Most of this increase will eventually be passed on to mortgage customers. How much depends on the competitive pressures the banks feel under. I could see another 0.25% increase not being passed on by the banks.
He added, Anyone on a variable rate should seriously consider locking into a longer-term fixed rate. Regardless of how high the ECB eventually raises rates, variable rates are generally poorly priced compared to fixed rates already. Anyone on a tracker needs to get expert advice to assess their options – depending on how high rates go, and the margin you’re paying, moving off a tracker may or may not make sense."