Irish consumers have been urged to shop around for good deals after new figures revealed that mortgage rates are still the highest in the eurozone.
Statistics published by the Central Bank showed that the average interest rate on new mortgages agreed in June was 3.23 per cent, slightly higher than in May. In the eurozone, the average across all 19 nations was 1.78 per cent.
Bonkers.ie, a price comparison website, said the difference in mortgage rates meant that Irish consumers paid thousands of euros more every year than their European counterparts.
It cited the example of a first-time buyer with a €250,000 mortgage over a 30-year period. In Ireland, repayments would be €1,085 a month, compared with only €897 elsewhere. Bonkers.ie said that this equated to nearly €68,000 over the life of the loan.
Daragh Cassidy, head of communications at Bonkers.ie, said that consumers were paying way above the average for a variety of reasons, including a lack of competition and the fact that many lenders still had a large number of low-margin tracker mortgages on their books.
“The market in Ireland is very concentrated, you don’t see such a small amount of competition in markets of a similar size,” he said. “The banks also still have a huge amount of trackers on their books and new customers are being penalised for losses or small profits that they are making on the trackers.”
Mr Cassidy also acknowledged that the difficulty in repossessing homes was also likely to be a factor. This difficulty has been cited often by the banks, who have pointed out that there are tens of thousands of customers who are in arrears for three years or more. “It is very difficult for banks to repossess houses in Ireland. If you look at the level of repossessions in Ireland and internationally, there’s no comparison,” Mr Cassidy said.
There are no quick fixes to any of these issues and Mr Cassidy said that in the meantime consumers have to be aware of all their options to get the best possible deal.
“My advice to first-time buyers would be to do your research early on and know what rates are out there,” he said. “There are some fixed rates that are as low as 2.3 per cent. Don’t necessarily go with the first bank which offers you a mortgage.”
The Central Bank figures also showed a surge in the total number of new mortgages approved, which rose by 34 per cent in the year to June.
It found that fixed rate loans are becoming increasingly popular, accounting for 59 per cent of new mortgage agreements in the three months to June. This was up from 54 per cent in the three months to May, but is still much lower than the European average of 80 per cent.
The average fixed rate for the year to date stands at 3.11 per cent.
Joey Sheahan, head of credit at mymortgages.ie, a broking firm, said that the Central Bank figures “can really be seen as positive for consumers . . . it appears there is a much greater awareness among mortgage holders of the benefits of fixing at the moment.
“The banks know that the popularity of fixed rates is soaring — KBC is the latest to slash its rates [on a] 5-year fixed rate to 2.8 per cent. These cuts signal real savings for mortgage holders.”
Source: The Times UK https://www.thetimes.co.uk/article/mortgage-rates-in-ireland-are-still-highest-in-the-eurozone-xhclxcjfn
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