Ireland’s high mortgage rates and how you can save by switching - KFM

Image Ireland’s high mortgage rates and how you can save by switching - KFM

The latest figures released by the Central Bank reveal that Ireland had the second highest mortgage interest rates across the Eurozone area in December 2020.

While this may no longer come as much of a surprise to mortgage holders here, what is surprising is just how big an impact it has on how much you pay.

Our Head of Communications at, Daragh Cassidy, joined Ciara Plunkett on Kildare Focus on KFM to discuss mortgage rates here and what home owners can do to help mitigate paying out of pocket.

Here’s an outline of the main points discussed by Daragh in the interview.

Central Bank Statistics

Every month the Central Bank releases mortgage rate figures, and every month for the past 5 years Ireland has been near the top. 

Recent figures released show that Ireland has the second-highest mortgage interest rate in the European Union, at 2.76% This is more than double the EU average of 1.29%. Despite this, rates in Ireland at the moment are close to their lowest level historically. 

How does this affect mortgage holders?

According to the Banking & Payments Federation Ireland (BPFI), the average first-time buyer mortgage is now around €250,000. Someone taking out a mortgage of that amount for thirty years would be paying an extra €184 a month compared to the Eurozone average.

If we had rates closer to the EU average, you could knock a decade off your mortgage and instead be putting that spare money towards your pension. 

Why are mortgage rates in Ireland so high?

There are a number of reasons why mortgage rates are so high here.

Mortgage lending in Ireland is more risky than in other European countries. In Ireland, if a mortgage isn’t being paid, it can be quite difficult to take back ownership of a property, which isn’t the case in many European countries.

Some listeners will be aware of some high profile cases recently about farms in Roscommon or the case of the former Miss Ireland in Clontarf in Dublin. The loans weren’t being repaid for four, five or six years. That’s really unheard of in places like Denmark and Sweden, where if you miss 3 or 4 months, then chances are you’ll lose the property.

There are people who aren’t paying their mortgage, so it means that banks here have to hold a lot more capital in reserve to account for these potential bad loans.

Another reason is that there’s a lack of competition. The market is basically still just two or three big lenders. The less competition there is, the higher the interest rates.

New entrants into the mortgage market

Ireland has a small banking pool and not many banks engage in mortgage lending. It’s important to remember that we’re a small country - there’s only 5 million of us - so it’s always going to be less attractive to the big foreign companies.

Avant Money entered the market a few months ago with a market-leading rate of 1.95%. This is the first time that rates have been below 2% in a long time. This is great, but they’re being quite selective with who they’re focusing on and they really want to focus on switchers. 

There’s been talk about An Post teaming up with someone, perhaps a bank like Santander. However, that really hasn’t come to fruition. A lot of the foreign lenders have been put off coming here and we’re underbanked at the moment. 

What can the average householder do?

When Ulster Bank and KBC exit the market, there will be even less competition. However even though there is a lack of competition in the market and rates are above average, you still can save money by switching and researching.

Many listeners probably have a mortgage rate of 3-3.5% because they might have taken out a mortgage a few years ago when rates were higher. It’s advisable that those people take the time to look at what they could save on their mortgage.

Shop around for the best rates

What do you think of Ireland’s high mortgage interest rates? Remember to consider all options when looking for a mortgage.

  • If you’re a first-time buyer, make sure you do your research and shop around before applying for a mortgage. There’s now a large variation in interest rates and cashback incentives across different lenders.
  • If you already have a mortgage, then consider switching. Despite the fact that mortgage rates are high, you can still save a lot of money. To see exactly how much you could save by switching, check out our handy mortgage calculator. 
  • Have a look at our useful guide if you want to know exactly how to switch mortgages and if you’re wondering what the costs associated with switching are, you can learn more about the legal fees in our recent blog.

If you have any questions regarding mortgage switching, feel free to reach out to us on social media! We’re on Facebook, Twitter and Instagram.