Just as the latest figures show that home loans in Ireland continue to be the most expensive in Europe, mortgage holders have been warned that we are just months away from interest rate rises.
The high cost of mortgages in the country remains, despite the fact that there was no change in the average rate in February. A it stands, borrowers are typically paying around €2,200 a year more than the average in the Eurozone to service a mortgage.
At 2.76% in February, the average interest rate on a new mortgage in Ireland is second only to Greece in the 19-country Eurozone. Finland has the lowest average mortgage rate in the Eurozone at just 0.85%. The highest average rate in the Eurozone in two years now stands at 1.36%, but this is up from 1.29% last December.
Daragh Cassidy of Bonkers.ie, a price comparison site and mortgage brokerage, said that “Irish mortgage rates are now probably close to the lowest level they’ll ever be. 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.”
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.
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 7.5%, 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.”