Why are Irish mortgage rates so high? - KFM

Image Why are Irish mortgage rates so high? - KFM

The topic of mortgage rates is never far from the headlines in Ireland. New figures from the Central Bank have revealed that Irish consumers are paying the highest mortgage interest rates in the Eurozone once again.

Daragh Cassidy, Head of Communications at bonkers.ie appeared on KFM to discuss the recent figures and outline why rates are so high.

Here’s a breakdown of the main points discussed by Daragh in the interview.

Will mortgage rates in Ireland go down?

We’ve had among the highest mortgage rates in the Eurozone for the last 5 or 6 years and it’s very frustrating for Irish consumers. 

There is a little bit of light at the end of the tunnel, as rates are gradually beginning to drop. They’re falling very slowly but there is a wide variation in rates. 

The average mortgage rate in Ireland is 2.73% and the Eurozone average is 1.28%. Some countries have far lower rates, for example in Finland where you can get a rate of 0.71%. 

In Ireland it’s possible to now get rates of 1.95%, which is a little bit closer to the Eurozone average, but there are caveats. You can more widely get rates of between 2.2-2.3%.

Competition is slowly starting to improve, despite KBC and Ulster Bank planning their exits from the Irish market. We now have Avant Money, ICS Mortgages and Finance Ireland coming in with reduced rates.

Why are rates here so high?

  1. There’s still a lack of competition, despite things improving. Our mortgage market remains quite concentrated in the hands of a few main banks, which are Bank of Ireland, AIB and Permanent TSB to a lesser extent. New Spanish-owned lender Avant Money has entered the market and other lenders have lowered their rates. However, competition is still a little bit lacking.
  2. Mortgage lending in Ireland is considered very risky. It’s very difficult for a bank or lender in Ireland to repossess a home if someone hasn’t paid their mortgage in many years. Regulators require Irish banks to hold way more capital, around three times more, than other European banks. 

Spanish-owned Avant Money doesn't have to hold as much capital as Irish banks, so it can offer the lowest rates in the Irish market.

Do you want to know more? You can learn about why mortgage rates are so high here.

First-time buyers

In the vast majority of cases, it’s cheaper to buy than it is to rent because your mortgage payments will be less than your rent. 

Even though property prices are going up, evaluate what you can afford and make sure you shop around.

If you’re trying to get on the property ladder, make sure you review which banks have the best mortgage rates for first-time buyers here and take a look at our top tips for getting your mortgage deposit together.

Start your mortgage journey with bonkers.ie

Whether you’re a first-time buyer, home mover or switcher, you can easily compare interest rates, offers and cashback incentives from all Ireland's lenders using our mortgage calculator

When the time comes for you to apply for your mortgage, you can submit an online enquiry through our new mortgage broker service and one of our experienced financial advisors will call you back to get your application started.

You’ll be happy to hear that our mortgage broker service is entirely free and is fully digital from start to finish, meaning everything can be carried out online from the comfort of your home. And it's completely paper-free too! 

If you want to know more about mortgages before applying, check out the following articles:

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