Average interest rate on new mortgage rises again in August

The average interest rate on new mortgages rose again in August, albeit at a slower rate than earlier in the summer, leaving it still well above the euro area average

The weighted average rate increased by four basis points to 4.1 per cent compared to a month earlier, according to Central Bank of Ireland data. While that is little changed from the two basis point increase in July, it is much slower than the 20 basis point jump recorded in June. That leaves the Irish rate about 15 basis points higher than the euro area average, the Central Bank said in a statement.

Compared to a year earlier, the weighted average rate is now 1.36 percentage points higher than it was. That increase has coincided with a wave of interest rate hikes from the European Central Bank, as it attempts to tamp down runaway inflation and haul it back towards its 2 per cent target. ECB president Christine Lagarde last month reiterated that borrowing costs would remain elevated for as long as needed to tame consumer prices – even as the bloc’s economy struggles.

Fixed-rate mortgages, which make up most of the new home loan market, had an average rate of 4.03 per cent.

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Overall, about €992 million worth of new mortgages were written in August, the Central Bank said. That was up about 14 per cent on July and about 6 per cent compared to July 2022, it added.

About €251 million worth of new consumer loans were cleared during the month, up about 25 per cent on the corresponding period a year earlier, while the level of renegotiated mortgages slumped to €185 million compared to €286 million.

In contrast to the overall market, loan agreements involving non-financial corporations (NFCs) fell 15 per cent year on year while new NFC loans worth more than €1 million plunged 21 per cent year on year.