New mortgage agreements amount to €417m in June

New mortgage agreements amounted to €417 million in June, bringing the overall level in Ireland over the past 12 months to €4.5 billion, new data for May has shown.

The weighted average interest rate on all pure new mortgage agreements, excluding renegotiations, declined 30 basis points over the period to 3.56 per cent in June, according to Central Bank monthly retail interest rates statistics.

Variable rate mortgages accounted for two-thirds of all new mortgage agreements over the past year, for both principal dwelling houses (PDH) and buy-to-lets (BTL).

This is significantly above the equivalent euro area share.

The most pronounced fall in PDH mortgage rates over the year was for standard variable rate mortgages, falling by 53 points to 3.6 per cent by the end of the second quarter.

Fixed rate PDH mortgage rates also declined, with those for one to three years dropping by 26 points over the same period.

The share of fixed PDH mortgages increased over the year and accounted for just over 40 per cent of all new PDH mortgages in the second quarter of 2016.

Renegotiated loans for house purchases totalled €300 million in June with variable rate products accounting for the majority. The weighted average interest rate for renegotiated mortgages was 3.03 per cent.

Overall, figures for June show the rate on all new floating rate loan agreements for house purchases, including renegotiations, was 3.22 per cent. This corresponded with a 9 basis point decline over the past 12 months.

Commenting on the data, Rachel McGovern, chief operations officer at the Professional Insurance Brokers Association (PIBA), said good long-term fixed interest rates for periods of 15, 20 and 25 years should be the norm, particularly following the property boom.

“[This] would give confidence to mortgage holders enabling them to plan with confidence for the future. The financial crash has left many with concerns about affordability and property prices into the future,” she said.

“Instead there is just one Irish lender with a 10-year fixed interest rate. Fixed rates for periods of one to three years are not long-term fixed interest rates in any real sense.

“They give little assurance about future financial liabilities.”