Expensive mortgages in this country about to get even dearer


MORTGAGE holders have been warned that we are just months away from interest rate rises.

It comes as new figures show Ireland continues to have the most expensive home-loans in Europe. Borrowers here are typically paying around €2,200 a year more than the average in the Eurozone to service a mortgage. The high cost of mortgages here is despite the fact that there was no change in the average rate in this country in February.

In the same month rates across the Eurozone rose, hitting their highest level in two years. At 2.76pc in February, the average interest rate on a new mortgage in Ireland is second only to Greece in the 19-country Eurozone.

The Eurozone average is 1.36pc, but this is up from 1.29pc last December. This marks the highest average rate in the Eurozone in two years.

In the last few weeks mortgage rates have been cut by Permanent TSB, Bank of Ireland and EBS. However, ICS Mortgages increased its rates towards the end of February.

Daragh Cassidy of price comparison site and mortgage brokerage Bonkers.ie said: “Irish mortgage rates are now probably close to the lowest level they’ll ever be.” He said central banks have begun to raise rates in the US, UK and New Zealand, and it is likely the ECB will shortly follow suit.

“Fixed rates of up to 30 years are now available in Ireland for the first time so I’d advise homeowners to seriously consider locking into a long-term fixed rate to hep shield themselves from upcoming rate increases.”

Financial markets had been pricing in two European Central Bank (ECB) rate rises this year, which would make variable, trackers and new fixed rates even more expensive in this country. An ECB rate rise will make variable and tracker mortgages more expensive. It will also mean dearer new fixed rates. About 200,000 homeowners are on standard variable rates and are set to pay more with rates. Around 250,000 are on trackers, which rise or fall when the ECB rate changes.

Mr Cassidy said: “Rapidly rising inflation has led to talk of an increase in interest rates by the ECB over the coming months to help tame it.

“With inflation in the Eurozone at 7.5pc, it’s almost four times the ECB’s target. However, the current war between Russia and Ukraine has significantly clouded the forecast for the timing of a potential rate rise.”

He added that Irish mortgage rates are so out of kilter with the ECB base rate that we could see a small increase in the ECB rate being absorbed by lenders rather than being passed on to consumers. It will depend on the competitive pressures the banks feel under, he said.

Figures from the banks show that the average first-time buyer mortgage in Ireland is around €266,000. This means someone borrowing this amount over 30 years is paying around €183 extra a month, or €2,200 a year, compared to our European neighbours.

Banks in this country say they are forced to charge more here because mortgage lending in Ireland is considered risky, partly because banks have difficulty enforcing security if a loan goes into arrears. This means Irish banks must hold around three times the level of capital to safeguard against potential loan losses compared to banks in the rest of Europe.


Whether you are  looking to switch lender  currently, a first time buyer or  moving home, should you have any concerns about the issues raised in this article,  or investing in a buy-to-let property, why not chat to a Seaspray Mortgage adviser today about finding the mortgage that’s right for you:

tel.+353 1 7070 000     or email     john.finnamore@seasprayfs.ie


Seaspray Financial Services Ltd trading as Seaspray Private and Seaspray Mortgages is regulated by the Central Bank of Ireland with registered number C165527


This content is taken from a previous article published by independent.ie on 13-04-22,written by Charlie Weston (Independent.ie)


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