Mortgage rates have dropped across some EU states while Ireland continues to have the third lowest in the bloc.
However, mortgage holders have been warned to brace for imminent increases from Irish lenders amid projections for fresh ECB hikes in the coming weeks.
The Central Bank of Ireland’s latest figures show that the average interest rate on a new mortgage here dipped to 2.92% in February from 2.93% in January.
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This compares to a 3.33% average mortgage rate in the Eurozone – which is nearly three times higher than it was just 18 months ago.
It means that the rates for Ireland – which are provided by the CBI based on mortgages from major lenders like AIB, Bank of Ireland and Permanent TSB – are below the EU average.
But analysts claim that the latest Central Bank figures would show higher rates if mortgages from other lenders were also included in the latest data.
Daragh Cassidy of mortgage broker bonkers.ie also believes that the rates will rise in the coming months.
He claimed the main banks have not been passing on the full ECB rate hikes to mortgage customers in recent months, but predicts that increases are now inevitable.
He said: “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 2 percentage points on average.”
He added: “The CBI figures also only take into account mortgages drawn down with AIB, BOI and PTSB.
“The non-bank lenders aren’t included in these monthly figures. If they were, the rate would be higher.
“Looking forward, 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.”
Ireland and Malta were the only countries to see their rates fall.
Malta’s 2.08% average mortgage interest is the EU’s lowest, followed by 2.51% in France, and Ireland’s 2.92%.
Cassidy said: “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 3.40% with Bank of Ireland or Avant Money. These rates are still competitive compared to rates on offer elsewhere in Europe.”
Meanwhile, borrowers have been warned that their situation will have worsened since February when these latest CBI figures are based.
Brokers Ireland yesterday claimed that is due to the “number and level of increases announced by lenders since February”.
The firm said that while there is exception for the 400,000 borrowers who are on fixed rate mortgages – where lenders cannot increase their interest rates for the fixed period – as many as 60% of these are fixed for less than three years.
Its financial services director Rachel McGovern said: “Many of these are, from now on, exiting their fixed rate and coming into a changed, higher interest rate environment.
“About 315,000 borrowers, including tracker mortgage holders, are on variable rates.
“Just over a quarter are on trackers, which automatically see increases when the ECB raises its rate.
“So, three quarters are exposed to the decisions of their lenders, who while slow at the beginning of ECB rate rises to increase rates, are now moving more quickly to apply increases.”
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