New mortgage interest rates rise above 4%

Interest rates on new mortgages surpassed the eurozone average during June.

Interest rates on new mortgages rose above 4% in June as rate increases from the European Central Bank (ECB) continue to make their way through to customers, new data from the Central Bank shows.

The average interest rate for new mortgages now stands at 4.04% — up from 3.84% recorded in May which is the second largest increase in the eurozone.

In June, the rates charged by Irish banks surpassed the eurozone average of 3.79%. Ireland now has the 11th highest interest rates in the eurozone.

Latvia currently has the highest rates in the eurozone at 6.02%, followed by Lithuania at 5.62%.

The countries with the lowest rates are Malta at 1.93% and France at 3.26%.

The total volume of new mortgage agreements during June amounted to €763 million — a 12% increase on May but a decrease of 8% compared to the same time last year. Rates charged on loans to small businesses increased to 6.6%. 

The average interest rate charged on new consumer loans also increased to 8.19% - up 0.31% compared to May. 

Daragh Cassidy, of mortgage broker bonkers.ie, said latest figures from the Central Bank were compiled before the main lenders raised their rates again in July which means the average rate now is closer to 4.50% or 4.75%.

“Even if the ECB doesn’t hike rates again, it’s likely the main lenders will still hike rates once or twice more over the coming months for their variable rate and new fixed-rate customers,” he said.