Irish consumers still pay the highest mortgage rates in Europe

Irish consumers still pay a massive premium on mortgage products compared to their European counterparts.

Figures from the Central Bank show that the average rate applied to new mortgages here in January was 2.79 percent, compared to an average of 1.35 percent in the eurozone. The Irish rate was the highest in the euro area.

It is estimated that the 1.5% spread will cost Irish buyers an additional € 80,000 on a typical € 300,000 mortgage.

Critics say the premium levied on Irish borrowers is evidence of a lack of competition in the Irish market, a situation made worse by the recent departure of Ulster Bank.

The latest figures also show the impact of Covid-19 on the mortgage market here. The volume of new mortgage contracts fell 48% to 500 million euros in January from the previous month, as restrictions aimed at curbing the virus hampered activity. The overall figure was down 7 percent from the same month last year.

Fixed rate mortgages (including renegotiations) accounted for 80% of all new deals in January, the central bank said.

The number of new buyers opting for fixed rates has risen sharply in recent years. In 2014, fixed rate products represented only 10% of Irish home loans.

The ultra low interest rate environment internationally has led some lenders to offer lower fixed rate loans than variable loans. Fixed rates are generally higher than variable rates, with the premium reflecting the certainty that the borrower is secured.

“The first point to note is probably that Ireland is now ranked among the highest rates in Europe,” said Trevor Grant of the Association of Irish Mortgage Advisers.

“While it is indicative of the challenges here in terms of the need to cut rates, it is important that mortgage holders and potential switches are not completely deterred and / or deterred by the data.

“The point is, yes, our rates are higher for a variety of reasons – some of which can and should be addressed – but there is still a lot of competition in the marketplace and the savings many homeowners can achieve by changing their mortgages are. better than they have been for many years.

Separate figures from the Central Bank show that total assets held by insurance companies increased by 16.5 billion euros in the last quarter of last year to 380 billion euros.

This is the highest level of total assets in the series to date, the regulator said.

The main drivers of this increase were stocks, bonds and mixed investment funds (FIs), responsible for € 11 billion of the collective increase, he said.

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