The average interest rate on new mortgage agreements fell slightly again in November, continuing the trend recorded in the month before, according to new figures by the Central Bank.
The regulator’s statistics showed that the average interest rate on a new mortgage was 4.25%, falling marginally from 4.27% in October, which was also down from 4.30% in September.
The declines come after markets indicated that the European Central Bank (ECB) reached a peak with interest rates in September after an aggressive campaign to drive down inflation.
Trevor Grant, Association of Irish Mortgage Advisors (AIMA) chairperson, warned that interest rates may still sting many mortgage holders this year, despite reductions on the horizon.
“There are an estimated 100,000 mortgage holders whose fixed rate will expire within the next 12 months and who are therefore facing a significant financial shock because they will see a substantial increase in their interest rate, and therefore their mortgage repayments, when their fixed rate mortgage term expires,” he said.
Experts across Europe have anticipated that the ECB will implement cuts before summer but Joey Sheahan, head of credit at online brokers MyMortgages.ie remains cautious.
“While it’s very likely that rates will come down at some stage this year, it doesn’t mean that mortgage lenders will pass any cuts on to their customers, mainly because they have not yet passed on the full amount of the 10 successive ECB rate hikes,” he said.
The average interest rate on new fixed rate mortgages, which constitute the majority of the volume of new mortgage agreements, was 4.20%, a 3% decline on the previous month, the Central Bank statistics showed.
The total volume of pure new mortgage agreements amounted to €860m, climbing 2% on the previous month, and a decline of 40% annually.
Ireland still has one of the highest interest rates for mortgages across the euro area despite these declines with other leading economies including France and Germany charging less.
The eurozone average interest rate increased to 4.13%.
Meanwhile, the Central Bank figures also showed the interest rate on new consumer loans increased by 12 basis points to 7.8% during the same period compared to October.
The total volume of new consumer loans was €193m, an increase of 11% in annual terms.