Irish mortgage holders paying €2,000 more each year in interest rates than Europeans

New data from the Central Bank shows Ireland and Greece have the highest mortgage interest rates in Europe
Irish mortgage holders paying €2,000 more each year in interest rates than Europeans

The average mortgage holder in Ireland is spending an extra €167 each month when compared with our European neighbours. Picture: iStock

Irish mortgage holders are paying as much as €2,000 more per year in interest rates compared to our European counterparts, according to new Central Bank of Ireland figures.

The data shows that Ireland and Greece have the highest mortgage interest rates in Europe, with the average rate in the two countries now twice the European average at 2.79%.

The average interest rate charged on mortgages across the Eurozone by comparison was 1.31% in November last.

The November 2020 rate in Ireland represents a fall of 0.11% compared to the same month in 2019 but shows that mortgage holders are continuing to pay above Eurozone rates.

Fixed mortgage interest rates on new home loans averaged 2.67%, while variable rates on new mortgages stood at 3.32%.

In total, €882m in new home loans were agreed in November last, a 1% increase compared to November 2019.

Comparison and switching website bonkers.ie estimated that Irish mortgage holders were paying €2,000 more in interest rates per annum compared to their European neighbours because of the higher interest rate.

The average first-time buyer mortgage is about €225,000, according to the Banking and Payments Federation Ireland (BPFI), which means that someone borrowing this amount over 30 years is paying over €167 extra a month or just over €2,000 a year compared to their European counterparts.

Head of communications at bonkers.ie, Daragh Cassidy, said it was “hugely frustrating” that mortgage interest rates had not fallen further in Ireland, in particular given the greater competition in the lending market.

“The fall in mortgage rates over the past year is obviously welcome and the overall trend does appear to be downward, albeit very, very slowly,” Mr Cassidy said.

Yet while there are some valid reasons as to why mortgage rates are higher in Ireland than they are in the rest of Europe, it’s tough to accept that rates here should be over double the Eurozone average, and it’s hugely frustrating that they haven’t fallen further. 

"The recent arrival of Avant Money into the market doesn’t seem to be impacting much on rates yet either,” he added.

Mr Cassidy urged would-be first-time buyers to “shop around” as there is significant variation in interest rates being offered by lenders, with some rates as low as 2.30% for standard first-time buyers with a 10% deposit.

“There’s now a huge variation in interest rates and cashback incentives across all the different lenders; so find out who’s offering the best deal for you,” he said.

Those already on the property ladder could also save money by considering switching their mortgage holder, Mr Cassidy said.

While there are costs associated with switching, some lenders are providing cashback incentives or a contribution towards legal fees.

Someone with an outstanding mortgage of €250,000 over 20 years at an interest rate of 4% or above could save over €200 a month on their repayments by switching, he said.

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