Latest figures from the Central Bank show that Irish mortgage holders continue to pay way higher interest rates than most of our European neighbours. So why are we paying so much and what can be done?
Ireland has reclaimed the unenviable position of having the highest mortgage rates in the Eurozone, according to new data today from the Central Bank of Ireland.
At 2.79%, the average interest rate on a new mortgage in Ireland is now the joint highest in the 19-country Eurozone along with Greece.
Although rates have fallen slightly by 0.11% compared to this time last year, they're still far above what’s being charged elsewhere in the Eurozone where the average rate is just 1.31%.
First-time buyers paying significantly more
According to the BPFI, the average first-time buyer mortgage in Ireland is around €225,000. This means someone borrowing this amount over 30 years is paying over €167 extra a month or just over €2,000 a year compared to our European neighbours.
This equates to more than €60,000 extra over the lifetime of the loan.
| Ireland monthly repayment | Eurozone monthly repayment |
| €923.32 (2.79% average interest rate) | €756.17 (1.31% average interest rate) |
The figures also show that the popularity of fixed rates continues to rise and these now account for 80% of new mortgages. However, this is still slightly below European norms where over 84% of mortgages are fixed.
Why are mortgage rates in Ireland so high?
There is still a lack of competition in the Irish mortgage market as it remains heavily concentrated in the hands of a few main banks; mainly AIB, Bank of Ireland, and to a lesser extent Ulster Bank. And although competition in the market has heated up in recent times, particularly with the recent arrival of Avant Money who are offering rates as low as 1.95%, it's still below where it should be and this has lead to higher rates.
Irish banks still also have a large number of tracker mortgages on their books. These ultra low-rate mortgages make only a small profit for the banks, so they’re recouping their losses by charging new customers higher rates.
There are several other reasons too, such as the riskier nature of lending in Ireland as well as the extra capital banks must hold as a result.
See here for a more in-depth look at why mortgage rates in Ireland are so high.
What can people do to combat high rates?
If you’re a first-time buyer who’s at the start of their mortgage journey, make sure you do your research and shop around. Remember that you don’t have to be an existing customer with a particular bank to get a mortgage off them.
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. While the average interest rate is 2.79%, there are now rates as low as 2.30% on offer for standard first-time buyers with a 10% deposit – even lower if you have more equity to stump up.
And if you already have a mortgage, then look into switching. In recent times Irish mortgage holders have been reluctant to switch, which is crazy given the potential savings involved.
Many lenders now have dedicated switch teams in place to make the process as easy as possible so it often won’t be as much hassle as you think it might. And while there are costs associated with switching mortgage provider, in many cases banks will provide a cashback incentive to those who switch or a contribution towards the legal fees.
So whether you're a first-time buyer, mover, or looking to see exactly how much you could save by switching lender, check out our handy mortgage calculator.
When it’s time to apply for your mortgage, you can submit an online enquiry through our new mortgage broker service and one of our experienced financial advisors will call you back to get your application started.
You’ll be happy to hear that our mortgage broker service is entirely free and is fully digital from start to finish, meaning everything can be carried out online from the comfort of your home. And it's completely paper-free too!
You can find out more about our mortgage broker service here and learn about how your mortgage application will be assessed here.
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Are you surprised to hear that we have such a high mortgage rate? If you have any questions about applying for a mortgage, let us know in the comments below or reach out to us on Facebook, Twitter or Instagram.
