Average mortgage interest rates in Ireland are now amongst the lowest in Europe despite a series of rate hikes by the European Central Bank (ECB).
New figures from the Central Bank of Ireland show the weighted average interest rate on new Irish mortgage agreements at the end of November was unchanged at 2.57%. In the same period, the equivalent euro area average rose by 19 basis points to 2.84%. The rate in Ireland remains below the euro area average.
Ireland now has the third cheapest mortgage rates in the Eurozone, behind countries such as Germany, Belgium, and the Netherlands. In recent years, the interest rates paid by mortgage holders in Ireland were often one to 1 and a half percentage points above those in other European countries.
Daragh Cassidy of bonkers.ie said November was likely to mark the lowest point in the current mortgage rate cycle as the main retail banks have begun to raise their rates in response to the ECB hikes.
“I don’t think anyone had in their forecasts that Ireland was going to have among the cheapest mortgage rates in the Eurozone. Not least the third lowest. However, this is unlikely to be the case for much longer.”
“These figures apply for mortgages which were drawn down in November and applied for several weeks or months beforehand. Someone who applies for a mortgage today will be faced with much higher rate options.
“The ECB is almost guaranteed to hike rates by at least another 0.25 or 0.50 percentage points when it meets at the start of February and by at least another 0.25 percentage points when it meets again in the middle of March. This means yet more rate increases from all the lenders are likely over the coming weeks. Indeed even the most recent ECB hike from December hasn’t been passed on yet.
According to the Central Bank data, the average rate for new fixed-rate mortgages, which constitute the majority (93%) of the total new mortgage agreements, was 2.48% in November.
The value of new mortgage agreements amounted to €1.4bn in November, an increase of 31.6% on the previous month and a 71.1% increase since November 2021.
Renegotiated mortgages totalled €600m in November, 95% within the fixed rate mortgages category, this compares to €1,050m recorded in October.
