Why are mortgage rates and the cost of energy so high? - Drivetime

Image Why are mortgage rates and the cost of energy so high? - Drivetime

The cost of living is on the rise across Ireland, with mortgage rates and energy prices increasing. Figures from the Central Bank show that Irish customers are charged some of the highest mortgage rates in comparison to other countries in Europe.

Daragh Cassidy, Head of Communications at bonkers.ie, appeared on Drivetime to discuss the ongoing energy crisis and Ireland’s high mortgage rates. 

Listen back to the interview clip above or take a look at the main points discussed below.

What’s happening with the surge in energy prices?

The cost of living in Ireland is extremely high. In fact around a year ago, Eurostat had some statistics around the cost of mortgage and rent rates, and gas and electricity rates. It showed that we’re a staggering 78% above the European average. The cost of running a household here is very expensive.

When it comes to gas and electricity, it’s been a crisis year, unfortunately. There have been 35 price hike announcements so far this year and there’s already another one that’s due to come into effect on 1st January 2022. 

A lot of this comes down to the fact that the price of gas has shot up on wholesale markets in the last few months. We use a lot of natural gas to heat our home, but also to generate electricity.

This has put huge upward pressure on prices and gas and electricity in Ireland is at record levels. It’s never been more expensive.

Why is Ireland more impacted than other European countries by the energy crisis?

That’s a good question. According to Eurostat we’re the fourth most expensive, while a more recent report from Cable.co.uk shows we’re the ninth most expensive.

There are several reasons. The fact we’re an island location doesn’t help. It means a lot of our energy needs to be imported here. We rely heavily on fossil fuels which need to be imported here. We also don’t have the same economies of scale as other countries. We’re a smaller country and have a more dispersed population. 

The fact we don’t use nuclear power can also be factored into it and it’s quite controversial. Some people say nuclear won’t bring down the price, but if you look at other countries that do use nuclear, such as France and Sweden, their energy prices are less than ours. 

We’re also spending a huge amount of money upgrading our grid at the moment to cope with the amount of renewable energy we’re producing. One would hope in 10 or 15 years that that would start lessening the price. In the short term, it will probably just add to bills. 

You can learn more about why energy prices are on the rise in this blog.

What’s happening with mortgage rates?

Our mortgage rates are gradually coming down and they are currently at their lowest level in a long time. Compared to the EU, they're well above average though. 

The average in the EU at the moment is 1.82%, but believe it or not, you can get a rate as low as 0.73% in Finland and 0.81% in Portugal, which is absolutely nothing. 

Here in Ireland, the average rate is 2.73%. Only Greece has more expensive mortgage rates than we do. It’s been the case for years unfortunately, we’re regularly the most expensive country for mortgages. We drop back every now and then below Greece.

We pay on average an extra €180 a month compared to the EU average. That’s based on a mortgage of around €250,000. 

Discover why mortgage rates in Ireland are so high in our recent blog.

Compare energy and mortgage rates on bonkers.ie

Here at bonkers.ie you can compare a variety of products and switch providers to help you save money.

Are you looking to save on your energy bills this winter? Despite energy prices increasing, there still is value to be had by switching to a cheaper supplier.

Head over to our energy comparison page to quickly review available deals from Ireland’s main energy suppliers. You could switch online in minutes and save hundreds on your annual energy bills!

You may also want to take a look at these tips on how to save on your winter energy bills.

If you’re looking to compare mortgage rates, we’ve also got you covered. With our mortgage calculator, you can easily compare interest rates, loan terms, mortgage offers and cashback incentives from all of Ireland’s mortgage lenders

Don’t forget that you’ll also need mortgage protection insurance and home insurance in order to draw down your mortgage, both of which you can also get on bonkers.ie.

Did you know that you can also compare deals and prices for other insurance, banking products and broadband on bonkers.ie? See what other bills you could save on!

Get in touch with us

Do you have any questions about what was discussed in today’s interview? Feel free to get in touch with us. You can contact us on Facebook, Twitter and Instagram.