The Times: “Irish fork out €150 more each month on mortgages than Europeans”

Figures from the Banking and Payments Federation Ireland (BPFI) found that the average first-time buyer mortgage in Ireland is about €225,000.

A buyer who took out a mortgage of this size over 30 years would pay €949.82 a month based on a rate of 3.01 per cent. People taking out a loan at the eurozone average of 1.68 per cent would pay €796.10, a difference of about €154 a month. The difference means that a consumer paying the average Irish rate would spend about €55,000 more over the 30-year lifetime of a mortgage, provided that both rates stayed the same.

Mr Cassidy said that the figures showed that it paid for prospective housebuyers in Ireland to shop around for the best deal.

“Before, people felt that lots of banks offered similar prices, but over the last year we have seen a greater discrepancy in rates,” he told The Times. “They are still high in Ireland compared to the eurozone rate, but some are as low as 2.3 per cent, so there are big savings to be had.”

Mr Cassidy also said that it was important that people already on high rates looked at switching their mortgage to a different lender to get a better deal. “Someone who switches a €250,000 mortgage, and is currently paying a 4.3 per cent rate, could save over €250 a month by switching to the cheapest deal on the market,” he said.

The Central Bank introduced new rules at the start of the year which made it easier for consumers to switch their mortgage, including a requirement for banks to notify customers before their fixed-rate term ends about cheaper available deals.

Despite the savings on offer and the new rules, the number of people switching mortgages is low. The latest figures from the BPFI found that 632 people switched their mortgage in May, about 1 per cent of the overall market.

Joey Sheahan, the head of credit at MyMortgages.ie, said: “While it’s not possible for borrowers to force the banks’ hand on reducing rates, it is possible for these mortgage holders to take things into their own hands and ensure that they are absolutely getting the best deal for them.”

He said that anyone in a strong financial position and paying a rate of above 3 per cent “should definitely be looking to either switch rates or switch lender”.

Analysts have said that there are several reasons for the cost of Ireland’s mortgage rates, which have consistently been among the highest in the eurozone. These include the relative lack of competition in the market, which is dominated by AIB and Bank of Ireland, and the rate of repossessions, which is low by international standards. Banks have said that this makes it riskier to lend into the market.

A study published by the Department of Finance last year found that the capital requirements placed on the banks after the financial crisis had contributed to the high cost of Irish mortgages. Regulators make Irish banks hold a high level of capital to protect against a possible downturn. This capital is expensive to hold and contributes to higher mortgage rates.

Irish banks need to hold more of this capital compared with their European peers because of the sector’s near collapse during the financial crisis, which has caused regulators to view lenders in Ireland as vulnerable to downturns.