Mortgage interest rates 'to remain high', Central Bank figures show

Ireland's mortgage interest rates will likely remain among the highest in the eurozone if a proposed bill preventing banks from selling customers' homeloans without borrower approval is passed into law, a financial services representative group has said.

Latest Central Bank figures show Ireland to still have the second highest interest rate on new mortgages in the eurozone, at 3.03%. The average new mortgage rate in the eurozone is 1.77%. Only Greece has a higher rate than Ireland among countries which have the euro as their currency.

Sinn Féin unveiled its draft 'No Consent, No Sale' bill last month and the Central Bank has already warned government that the bill could prompt an increase in interest rates and lead to financial stability risks for the State.

Brokers Ireland has echoed those concerns on the back of the latest Central Bank figures, saying the bill would impact mortgage holders and prevent "much-needed" competition in the banking sector.

It said the recent narrowing of the mortgage rate gap between Ireland and the eurozone "could come to a halt" if Sinn Féin's bill, currently going through the Oireachtas, was passed into law.

“While we’re still 1.26% ahead of the euro area average, with less attractive long-term mortgage products by comparison with many of our European counterparts, it is important to acknowledge that there have been improvements over the last year or so," said Brokers Ireland director of financial services Rachel McGovern.

“While this message may be unpopular for politicians to articulate in an environment where the tracker mortgage scandal gets yet deeper, nonetheless, it is something we would implore them to consider very carefully, in the interest of mortgage holders and those wishing to get their first mortgages,” she said.

"In our view this bill is a step too far, it represents overzealous interference in the market that will have severe unintended consequences.”

Brokers Ireland said the vulture fund approach by lenders to dealing with the mortgage arrears crisis "may not have been the best one".

However, it said lenders having to seek written consent of borrowers before selling their mortgages - and to have documentation approved in advance by the Central Bank in each case - may not improve the situation.

More on this topic

House prices special report: Cork city prices up by €100k in five years

Fine Gael ‘on the side of cuckoo funds’

Housing Minister lobbied by developers for approval for Dublin high-rise buildings

Regulation of short-term letting sector belated but welcome

More in this Section

Tech startups make music and events a smooth operation

Wide range of demands leave employers warier than ever

Options required for carbon tax to work

Agrifood lobby may derail EU-US trade talks


We sell books: Sisters are doing it for themselves

Dark side of teen life: Bo Burnham's Eight Grade highlights anxieties of the self generation

Wealth inequality behind the extinction of mammals

Marginal ring ouzel could be next to disappear

More From The Irish Examiner