Irish mortgage interest rates fall for fourth consecutive month

The average interest rate on a new mortgage in Ireland has fallen for the fourth consecutive month.

The interest rate in July stood at 2.63%, compared to 2.68% in June.

Ireland, along with Malta and Greece, are the only countries in the euro zone to have recorded a drop in their mortgage rates. All the other countries saw an increase in their average rate, some of which were significant.

France again has the lowest average mortgage rate in the Eurozone at 1.45%, followed by Austria at 1.79%.

However, around this time last year, Finland had the lowest rate at just 0.69%, showing how far rates have started to rise in recent months.

The eurozone average is 2.08%, its highest level since at least August 2017.

By contrast, the average Irish mortgage rate is at its lowest since at least the same time and is now the fourth highest in the eurozone. It is the first time in more than two years that Ireland has not made it into the top three most expensive countries.

Daragh Cassidy, head of communications at bonkers.ie, said: “It looks like we finally have European mortgage rates – but not in the way we had hoped.

“Rates in Germany (2.87%) are now higher than they are in Ireland, which no one would have expected a few months ago.

“Unfortunately for homeowners, the ECB has signaled that it will continue to raise rates over the next few months. It is likely that the ECB will raise rates to around 2% before the end of the year and they could even reach close to by 3% in 2023. Most of this increase will ultimately be passed on to mortgage customers, depending on the competitive pressures banks face.

“Major lenders have yet to pass on any of the 1.25% rate increases to their customers, which is obviously welcome. Although some of the smaller non-bank lenders such as Avant Money and Finance Ireland have certainly did.

“Anyone who benefits from a floating rate should seriously consider locking into a longer-term fixed rate. No matter how high the ECB eventually raises rates, variable rates are generally mispriced relative to fixed rates already.

“Anyone using a tracker needs expert advice to weigh their options – depending on the high rates and margin you pay, leaving a tracker may or may not make sense.

“For those worried about rising inflation and the cost of living, switching mortgages is a really effective way to put money back in your pocket. A record number of people are now changing their mortgages and I encourage every homeowner to consider what they could save. For example, right now, if you’re paying 4% interest and you have $200,000 and 20 years left on your mortgage, you could save over $225 a month if you switched to fixed rate of 2.20%.

Leslie M. Gill