Why are Ireland’s mortgage rates so high? - Radio Kerry

Image Why are Ireland’s mortgage rates so high? - Radio Kerry

It may not come as much of a surprise to mortgage holders here, but the latest statistics from the Central Bank have shown that Ireland had the highest mortgage interest rates in the Euro area in January 2021, standing at 2.79%.

While better rates are available to mortgage customers from the likes of Avant Money and KBC, people are still paying far more than they need to.

Our Head of Communications at bonkers.ie, Daragh Cassidy appeared on Radio Kerry to discuss some of the reasons why Ireland now has the highest mortgage rates in the Eurozone and what consumers can do to make sure they're not overpaying on their mortgage bill each month.

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

The recent figures

Every month the central bank releases figures on the weighted average interest rate on new Irish mortgage agreements. For the past number of years, Ireland has been at the top. The average rate here currently is 2.79%, over double the EU average. 

Why are mortgage rates so high?

There are a few reasons why interest rates here are so high. 

  1. There is a lack of competition in the banking sector that hasn’t been improved in recent times, especially with the announcement that Ulster Bank is exiting the market.
  2. A lot of foreign lenders are being put off entering the Irish market. One of the main reasons for this is that lending in Ireland is considered quite risky, as is it’s tough to repossess a home. If loans aren’t being repaid, banks are going to factor that into the price they’re charging customers for the mortgage, which is the interest rate.

We recently wrote a blog about why mortgage interest rates are so high if you’re looking to learn more.

Home repossession figures

In Ireland if a loan isn't being repaid and a bank goes to take action in court, they’re only successful around 11% of the time. This is significantly lower than the EU average of 46%. Some countries, such as the Netherlands and Luxembourg, have a repossession success rate of as high as 80-90%. 

The length of time it takes for these cases to go through the courts is longer here, too, with it taking approximately 4 years in Ireland for the process to conclude. In some countries, this only takes 3 years.

Is this issue a result of the financial crash?

This is a hangover from the crash. After the crash, the ECB and the EU, in particular, tried to put in place a more Europe-wide approach to how the banking system is run in various countries. 

They deemed that lending in Ireland is riskier and because of that, banks need to hold more capital than in other countries. 

Buy-to-let homes

A lot of lengthy repossession cases that go through the courts are actually buy-to-let investments. People don’t want to sell at a loss or they think it’s wrong to be forced to sell. 

It is an investment and if the bank is losing money because someone isn't paying their mortgage, then someone else has to pick up the tab. This ends up being the average mortgage holder with a higher interest rate.

Consider switching mortgage

Would you switch mortgages? Even though interest rates in Ireland are high, it doesn’t mean you can’t get value by switching. 

There are rates of 2.2% or lower available, and some people might actually be paying more than the average 2.79%, meaning they could save even more!

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.