Irish mortgages cheaper, data shows

IRISH HOMEOWNERS are paying less than their European counterparts for mortgages, according to data from the Central Bank.

The bank’s retail interest rate statistics published yesterday shows that the average mortgage interest rate on Irish mortgages which were taken out for a period of five years or more is 2.98 per cent. This compares to a euro zone average of 3.76 per cent.

Irish mortgage holders are also benefiting from falling interest rates, with charges on an average mortgage down 44 basis points since the end of September.

This is due to the high proportion of Irish people who hold tracker mortgages and have benefited from the recent drops in European Central Bank interest rates.

In contrast, the interest rate on short-term loans of up to one year increased by 27 basis points in June to 8.95 per cent.

New loans for house purchases in June had an average interest rate of 3 per cent, slightly down from 3.04 per cent the previous month. More than 90 per cent of new mortgages had a floating rate or a one-year fixed interest rate.

Separately, figures published by the Central Bank yesterday show that Irish banks’ reliance on Irish and European central bank funding fell slightly in the month to June 27th.

Lending by the ECB to Irish banks fell by 5.4 per cent in June to €80.02 billion, down from €84.64 billion the previous month. Similarly, “other lending” – which mostly comprises emergency liquidity assistance (ELA) for banks – fell slightly to €41.6 billion from €42.4 billion the previous month.

ELA funding is typically used when a commercial bank no longer has collateral to meet the ECB’s standards for lending.

The figures include both domestic and international banks operating in Ireland.