Image Irish mortgage rates continue to fall slowly
Image Daragh Cassidy
Head Writer

New data shows that mortgage rates in Ireland are at their lowest level in years. But we still overpay compared to our European neighbours.

Ireland’s homeowners continue to pay above-average rates for their mortgages, according to the latest data from the Central Bank. 

However, mortgage rates here continue to creep downwards and are now at their lowest level since at least August 2017. 

At 2.72% in September, the average interest rate on a new mortgage in Ireland has fallen by 0.02% compared to last month and by 0.06% compared to September of last year. 

Rates were as high as 3.52% less than three years ago,

However Irish mortgage rates are still the second-highest in the 19-country Eurozone and are over double the currency bloc’s average!  

Finland has the lowest average rate in the Eurozone at just 0.71%, closely followed by Portugal at 0.79%. Greece, at 2.89%, has the highest average rates.   

The Eurozone average is 1.27%. 

According to the Banking and Payments Federation Ireland (BPFI), the average first-time buyer mortgage in Ireland is now around €250,000. So this means someone borrowing this amount over 30 years is paying almost €180 extra a month, or almost €2,200 a year, compared to our European neighbours. A lot of money that could be put the better use elsewhere no doubt!

Country

Rate 

Greece

2.89%

Ireland 

2.72%

Latvia 

2.52%

Netherlands

1.60%

Spain

1.44%

Eurozone average 

1.27%

Austria

1.18%

France 

1.09%

Slovakia

0.97%

Portugal

0.79%

Finland

0.71%

Why are mortgage rates so high?

Mortgage lending in Ireland is considered risky, partly because banks here have difficulty enforcing security if a loan goes into arrears. As a result, 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. Banks say this is one of the main reasons why Irish mortgage rates remain so high.    

There are other reasons though - and you can learn more about why mortgage rates in Ireland are so high in this blog.

Mortgage competition

Despite the impending exits of both Ulster Bank and KBC, competition in the mortgage market is relatively strong right now with ICS mortgages, EBS, Finance Ireland and Avant Money all reducing rates over the past six months or so.

However this isn’t really feeding through to the average rate consumers are being charged just yet.

This is partly because many of the lowest rates in Ireland right now come with big caveats - such as a 40% deposit - or are only available on B+ energy rated homes - something which is beyond the capabilities of many first-time buyers. Also, the bigger players like BOI and PTSB in particular, which have a large share of the mortgage market, charge among the highest rates. 

However the trend is downward and rates should continue to fall slowly over the coming year.

Compare, switch, and save

Even though rates in Ireland are high it still pays to shop around!

If you’re a first-time buyer who’s at the start of the mortgage journey, make sure you do your research, shop around and consider all mortgage lenders. For example, Avant Money, Finance Ireland and even ICS Mortgages may not be familiar names to many mortgage seekers, who may be tempted to go with more well-known lenders such as Permanent TSB and Bank of Ireland as their first port-of-call. However some of the lowest rates on offer now are from these smaller, lesser known lenders.

And if you already have a mortgage, then look into switching!

Switching activity has been growing strongly in recent months, which is great to see. In September, over 600 people switched their mortgage according to the BPFI, which was up almost 37% year-on-year.  

And while there are costs associated with switching mortgage provider, in some cases banks will provide a sizeable cashback incentive to those who switch.

Many people who took out a mortgage a few years ago could be paying rates far in excess of the current 2.72% average so switching could save them huge money. For example, if you have €250,000 outstanding on your mortgage with 20 years remaining, and are paying an interest rate of 4% or above, you could save over €230 a month on your repayments.

New mortgage broker service

At bonkers.ie we recently launched our new in-house mortgage broker service. The new, free service is fully digital from start to finish and means first-time buyers, movers and switchers can deal with bonkers.ie throughout their entire mortgage journey.

Head over to our mortgage comparison page to start comparing mortgage interest rates, cashback offers and incentives from Ireland’s main mortgage lenders. Submit an online enquiry and one of our mortgage advisors will call you back in mo time to get the ball rolling.

Don’t forget that you’ll also need mortgage protection insurance and home insurance if applying for a mortgage. You can use bonkers.ie to compare insurance quotes and sign up to a policy in less than one hour in some cases.  

Get in touch

If you have any questions about mortgage interest rates or applying for a mortgage, let us know. You can contact us on Facebook, Twitter or Instagram.