Irish mortgage rates climbing but still low by EU standards

Irish mortgage rates climbed to their highest level in six years in April but remain among the lowest in the euro zone according to fresh figures from the Central Bank.

Average rates were 3.63 per cent compared to a rate of 3.54 per cent in March.

Despite the month-on-month jump, Ireland still has among the lowest mortgage rates in the euro zone, something which has been attributed to Irish banks not passing on the full extent of European Central Bank (ECB) rate increases over the last 12 months.

Rates rose sharply in most euro zone countries with the exception of Malta, Germany and Slovenia, where declines were recorded.

Mortgage rates hit highest level since August 2017

---

Sweden cuts interest rates by a quarter point

---

‘Very few people believe that the next year will be a good time to buy a home’

---

The outlook for interest rate cuts is changing - so should Irish borrowers be worried?

---

As it stands the euro zone average rose to 3.57 per cent, almost three times the rate it was two years ago.

[ ECB likely to hike rates twice more, Central Bank governor says ]

“The increase in lending rates that we’ve seen in Ireland over the past few months is now showing up in the Central Bank figures,” said Daragh Cassidy of price comparison and switching website bonkers.ie. “However our mortgage rates are still among the lowest in the euro zone, for now at least.”

He noted that the ECB has hiked rates by 3.75 percentage points since last July with another quarter of a point hike set to be announced this week. “However the main banks have only hiked their fixed rates by around 1.5 to 2 percentage points on average and variable rates have hardly moved at all.”

He said that the banks’ “generosity” has “largely come at the expense of savers. Savings rates in Ireland are still poor. The best rate from the Irish banks is just 2 per cent from AIB and that comes with caveats. And BOI and PTSB only pay a maximum of 1.5 per cent. However deposit rates over 3.50 per cent are now available from some banks in Europe.”

He said that savers are “subsidising mortgage holders” and suggested that whether or not that was the right course of action will depend “on whether you talk to a mortgage holder or someone with big savings.”

The Central Bank figures are based on mortgages drawn down in April and most likely applied for several weeks ago with the rates on the table for many would-be borrowers now substantially higher than the average currently recorded.

The lowest fixed rate from AIB for a standard first-time buyer borrowing €270,000 with a 10 per cent deposit is 3.95 per cent while the lowest fixed rate from PTSB is 4.25 per cent and the lowest with Avant Money is 3.80 per cent.

“Mind you – these rates are still competitive compared to rates on offer elsewhere in Europe,” Mr Cassidy said.

He also warned that for prospective mortgage holders and those on trackers in particular are the medium-term outlook is for rates to go even higher over the coming months.

He urged people on trackers, variable rates, or who are soon to come to the end of their current fixed-rate period to speak to a mortgage broker to assess their options before rates go even higher.