Irish mortgage rates still the costliest

Irish mortgage rates have fallen only slightly in the past year, while buy-to-let investment borrowers have stopped falling altogether, leaving all Irish mortgages the costliest by far in the eurozone, official figures show, writes Eamon Quinn.

The Central Bank said a standard variable rate for new mortgage lending fell by 6 basis points in the year to 3.41% in the third quarter of 2017, while fixed-rate mortgage rates of one to three years fell by almost 30 basis points to 3.13%.

Fixed-rate mortgages in new borrowings accounted for 58% of all mortgage draw-downs, up sharply from a share of 36% in the third quarter of 2016.

All new Irish mortgage loans cost borrowers an average of 3.18%, compared with only 1.83% in the eurozone, the figures show.

And the cost for buy-to-let investors was unchanged in the year, at 4.73%, while fixed-rate mortgages for investors increased by 1 basis point to 4.85%. The vast majority of buy-to-let mortgages were loaned at variable rates, the Central Bank said.

The figures come as some market bets increased this week that the ECB may hike interest rates for the first time since the financial crisis earlier than expected.

Most analysts still expect the ECB will increase rates at the end of 2019, as it prepares to wind down its exceptional bond-buying, or quantitative easing programme, which has helped to keep interest rates at rock-bottom levels.

There are fears that the high-level of mortgage debt carried by Irish households will make them vulnerable when the ECB starts increasing borrowing costs.

Already the most expensive in the eurozone, Irish mortgage costs would rise further.

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