Ireland’s average mortgage interest rate continues to be the second highest in Europe after Greece, according to new figures from the Central Bank of Ireland.
Ireland was the only eurozone country to see a month-on-month decline in average mortgage rates.
In May 2022, the weighted average interest rate on new Irish mortgage agreements was 2.73%, a decline from 7 basis points on the same month last year.
In comparison, the average for the euro area rose to 1.76% in May, up 17 basis points from April 2022.
Greece was the only eurozone country to have a higher average mortgage interest rate than Ireland in May 2022, at 2.96%.
For new fixed-rate mortgage agreements, which make up 83% of all new agreements, was 2.55% in May.
This is a decline of 9 basis points from May 2021 and a decrease of 4 basis points from April 2022.
The figures also noted that for new variable rate mortgage agreements, the weighted average interest rate increased 11 basis points to 3.66 per cent in May.
The Central Bank noted that the rise in the use of fixed-rate mortgages in recent years has led to higher volatility in variable-rate mortgages.
In May, the total volume of new mortgage agreements amounted to €695m. This amounts to a rise of 21% in May 2021 and an increase of 15% from April 2022.
Daragh Cassidy, head of communications at bonkers.ie said: “These figures show the peculiarities of the Irish mortgage market. Rates here have been wildly out of kilter with the rest of the Eurozone for years. That continues – but this time it’s more positive. As rates have been increasing significantly in some countries over the past few months they’ve largely been static here.”
“Unfortunately for homeowners the ECB has signalled that it will start raising rates later this month but we don’t really know by how much. However Irish mortgage rates are so out of kilter with the ECB base rate that we could see a small increase in the ECB rate not being passed on to consumers.”
Mr Cassidy continued: “It’ll somewhat depend on the competitive pressures the banks feel under. On this point, it was encouraging to hear the CEO of Permanent TSB say last month that he feels the bank as well as the other Irish retail banks have the capacity to absorb the initial round of ECB rate hikes.”
Mr Cassidy stated that customers with tracker mortgages are likely to see an almost immediate increase in their repayments.
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