Mortgage rates fall below Eurozone average following record low of 2.57%

Irish mortgage rates currently stand as the fifth cheapest in the Eurozone

Irish mortgage rates were the only ones to fall compared to the previous month, landing them in the top five cheapest mortgage rates in the Eurozone

Irish mortgage rates fell to 2.57% in October of this year according to the Central Bank, the lowest rate ever recorded.

Down marginally from 2.58% from the previous September, Ireland's low rates have for the first time fallen below the Eurozone average of 2.65%. 

Irish mortgage rates were also the only ones to fall compared to the previous month, landing them in the top five cheapest mortgage rates in the Eurozone, coming behind Germany, Belgium, the Netherlands and Finland.

Commenting on the data, Daragh Cassidy, Head of Communications at bonkers.ie warned that record low mortgage rates are unlikely to continue into the future following substantial increases in lending rates across Irish retail banks.

"Over the past six or seven weeks there have been big rate hike announcements from AIB, Avant Money, Bank of Ireland and PTSB. These hikes will all start feeding through into the Central Bank figures from next month onwards.”

"Looking forward things don’t look great for those on trackers or those who are looking to buy over the coming months.

"The ECB is almost guaranteed to hike rates by at least another 0.5 percentage points when it meets tomorrow and by at least another 0.25 percentage points when it meets again in February. This means yet more rate increases from all the lenders are likely in the New Year"

However, Mr Cassidy assured that is was not all bad news, arguing that rising interest rates will help cool off property price growth while also resulting in slightly better rates for savers.

The Central Bank has also reported this morning that average fixed mortgage rates which constitute 92% of total new mortgage agreements remained at 2.46% in October, unchanged since the previous month. 

The total volume of new mortgage agreements also remained steady in October, staying relatively unchanged from the month prior at €1,096 million, an increase of just under 40% annually.

Renegotiated mortgages in October totalled €1,050m, up significantly from €675m in September, with the associated average interest rate increasing to 2.69%.

Despite mortgage rates remaining low relative to the Eurozone, loans to non-financial corporations (NFCs) remained significantly higher than the euro area average, with the average rate of interest rising to 3.66% in October, compared to the equivalent Eurozone rate of just 2.67%.

Interest Rates on loans to NFCs under €250,000, used as a proxy for loans to SMEs stood at 5.45% in October, well above the Eurozone average.

The volume of new NFC loans of over €1 million, which account for 85% of all new NFC loans, fell to €1,124m in October, a decrease of 11.4 per cent compared to October 2021.