Irish mortgage rates still second highest in Eurozone despite slight fall

Irish Mortgage Rates Still Second Highest In Eurozone Despite Slight Fall
At 2.72 per cent in September, the average interest rate on a new mortgage in Ireland has fallen by 0.02 per cent compared to August. © PA Archive/PA Images
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Kenneth Fox

Ireland’s homeowners continue to pay above-average rates for their mortgages, according to the latest data from the Central Bank.

It comes as rates have fallen to 2.72 per cent which is the lowest in the last four years and down 0.6 per cent on last year.


Overall, homeowners are still paying the second-highest rate in the Eurozone and double the average in the economic area which is 1.27 per cent.

At 2.72 per cent in September, the average interest rate on a new mortgage in Ireland has fallen by 0.02 per cent compared to August.

Finland has the lowest average rate in the Eurozone at just 0.71 per cent, closely followed by Portugal at 0.79 per cent. Greece meanwhile has the highest rate once again this month at 2.89 per cent.

According to the Banking and Payments Federation Ireland (BPFI), the average first-time buyer mortgage in Ireland is around €250,000.


This means someone borrowing this amount over 30 years is paying almost €180 extra a month, or almost €2,200 a year, compared to our European neighbours.

Mortgage rates have been slowly falling in Ireland in recent months and Avant Money and ICS Mortgages now both offer rates from as low as 1.95 per cent. However, big caveats apply to these rates.

Enforcing security

Mortgage lending in Ireland is considered risky, partly because banks here have difficulty enforcing security if a loan goes into arrears.

As a result, Irish banks must hold around three times the level of capital to safeguard against potential loan losses compared to banks in the rest of Europe. Banks say this is one of the main reasons why Irish mortgage rates remain so high.


Commenting on the news, Daragh Cassidy, head of Communications at says: “The fall in mortgage rates over the past year is obviously welcome, and the overall trend is downward, albeit very, very slowly. However, it’s still deeply frustrating that rates here remain so high compared to our Eurozone neighbours and have done so for so long.

“Despite the impending exits of both Ulster Bank and KBC, competition in the mortgage market is relatively strong with ICS mortgages, EBS, Finance Ireland and Avant Money all reducing rates over the past six months or so. However, this isn’t really feeding through to the average rate consumers are being charged just yet."

He said this is partly because many of the lowest rates in Ireland right now come with big caveats - such as a 40 per cent deposit - or are only available on B+ energy rated homes - something which is beyond the capabilities of many first-time buyers.

Mr Cassiday added "Also, the bigger players like Bank of Ireland and PTSB in particular, which have a large share of the mortgage market, charge among the highest rates."

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