'Central Bank and Government should be embarrassed' at costly Irish mortgage rates

Irish interest rates have been running at extremely high levels since Ireland joined the eurozone and the gap has not significantly narrowed, say experts.

Interest rates that Irish banks charge their customers for their new mortgages, fixed-rate, and even variable rate loans edged a bit lower in recent months, but the gap with the rest of the eurozone remains a chasm, Central Bank figures show.

It has been a running sore for over two decades that Irish households and small businesses pay elevated borrowing costs compared with the rest of the eurozone, but the latest figures show that the gap will not narrow any time soon. 

For years, and particularly since the onset of the pandemic, the ECB has strived to deliver rock-bottom interest rates across the eurozone, and has spent many billions of euro in buying up sovereign and corporate bonds to secure that objective. 

Extremely high levels

However, senior mortgage industry expert Michael Dowling said that Irish interest rates have been running at extremely high levels since Ireland joined the eurozone and the gap hadn't significantly narrowed despite banks and regulators offering "a range of excuses".  

"The Central Bank and the Government should be embarrassed," said Mr Dowling. 

The latest Central Bank data show banks charged an average of 2.59% for a new fixed-rate mortgage in November, while a new variable mortgage was at a rate of 3.28%. Overall, a new Irish mortgage loan cost 2.71% in November, down eight basis points from a year earlier, while across the eurozone as a whole new home loan borrowers were charged 1.3% in the same month. 

Industry group Brokers Ireland said the gap means Irish mortgage holders are paying almost €2,539 a year more than their fellow Europeans.