The average Irish mortgage rate is among the lowest in the eurozone and has taken a surprise dip – but only by 0.01 percentage points.
At 2.92% in February, the average interest rate on a new mortgage was down from 2.93% in January.
It means the monthly charge on a 25-year €300,000 loan drops marginally from €1,405.74 to €1,404.23 – a saving of €1.51 a month.
Ireland and Malta were the only countries to see their rates fall, and we now have the third lowest average mortgage rates in the eurozone, behind France (2.51%) and Malta (2.08%). Latvia has the highest at more than 5%. The eurozone average rose to 3.33%, almost three times the rate it was around 18 months ago.
Daragh Cassidy, of price comparison site Bonkers.ie, which also handles mortgages, said: “These figures show once again how slow the main banks have been at passing on the ECB [European Central Bank] rate increases to mortgage customers. Since last July, the ECB has hiked rates by 3.5 percentage points. However, the main banks have only hiked their fixed rates by around 1.5 to two percentage points on average.
“And variable rates have hardly moved at all.”
However, the fall in mortgage costs saw savers’ rates suffer. Mr Cassidy added: “This generosity has largely come at the expense of savers.
“Savings rates in Ireland are still miserable. The best rate is just 1.5% with Permanent TSB and Bank of Ireland only pays a maximum of 0.75%. Deposit rates at over 3% are now widely available in Europe. In essence, savers are now heavily subsidising mortgage holders. Whether that’s right will differ vastly depending on whether you talk to a mortgage holder or someone with big savings.”
Despite the mortgage drop last month, the medium-term outlook is for rates to go up.
Mr Cassidy continued: “These figures are based on mortgages drawn down in February but which may have been applied for several months before. Anyone who applies for a mortgage today will be faced with much higher rate options. For example, the lowest variable rate for a standard first-time buyer borrowing €270,000 with a 10% deposit is 3.15% with Haven.
“And the best fixed rate is 3.4% with Bank of Ireland or Avant Money. Mind you – these rates are still competitive compared to rates on offer elsewhere in Europe.”
The new figures were released by Ireland’s Central Bank, and Mr Cassidy said they “only take into account mortgages drawn down with AIB, Bank of Ireland and PTSB”. He added: “The nonbank lenders aren’t included in these monthly figures. If they were, the rate would be higher. The ECB is likely to hike rates again next month – perhaps by just 0.25 percentage points this time. But this still means more hikes from all lenders are almost guaranteed over the coming months.”
Campaigner David Hall, of the Irish Mortgage Holders Organisation, said of the mortgage rate drop: “It’s better than going up but will they maintain it, will they keep it?” He said there is “a bit of chatter about what the ECB is going to do next… That needs to be clarified urgently.”
