Irish mortgage-holders still paying over the odds, figures shows

Irish consumers are still paying over the odds for their mortgages, new figures from the Central Bank show.

According to the regulator, the rate on all new variable-rate mortgages was 3.11 per cent in July 2016.

While this has fallen 23 basis points over the past 12 months, it is still far higher than the equivalent European rate of just 1.82 per cent.

When the impact of renegotiated mortgages is excluded, the average rate on new mortgages is considerably higher at 3.49 per cent in July, although this is also falling, down 28 basis points in the year.

Standard variable-rate mortgages, which can be as high as 4.5 per cent at Bank of Ireland for example, decreased the most, falling 53 basis points. Fixed-rate mortgages over one to three years declined by 26 basis points . Fixed-rate mortgages accounted for just over 40 per cent of all new mortgages taken out on a family home in the second quarter.

Switching activity fell during the month, with the number of renegotiated home loans falling to €410 million in July, down from €894 million in October 2015. Renegotiated mortgages have a lower average interest rate of 2.94 per cent.

Rates on investment mortgages also fell during the year, with fixed rates falling 25 basis points to 4.9 per cent, and variable rates down 22 basis points to 4.87 per cent.

Savings

Irish consumers’ propensity to save is also on the rise, figures from the Nationwide UK (Ireland) Savings Index revealed on Friday. The index, which measures overall consumer sentiment towards saving, advanced in August, led by an increase in consumers who believed it was a good time to save in the wake of the UK referendum and as the Government prepares its autumn budget.

However figures from the Central Bank show that the overall environment remains tough, with the return offered by deposits continuing to fall. Indeed the regulator notes in its report that rates on household term deposits remained “subdued” in July, at just 0.15 per cent , down 13 percentage points over the year, and behind the euro average of 0.53 per cent.