Interest rate on a new mortgage breaks 4% mark - KFM

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The Central Bank has revealed that the average interest rate on new mortgages hit 4.04% in June, its highest level in years and it is only expected to rise further. 

Daragh Cassidy, Head of Communications at, appeared on KFM to discuss the latest mortgage rates. 

Key points from the Interview

  • According to figures from the Central Bank, the average interest rate on a new mortgage in Ireland rose significantly from 3.84% in May to 4.04%. 
  • Although 10 to 15 years ago interest rates were at 14%, the Irish population has gotten used to low-interest rates which sat at 0% for several years.  
  • Up until this time last year, you could even get a rate in Ireland for as low as 1.9%.
  • It’s important to note that the mortgage rates we are looking at for June are now slightly out of date. If someone applied for a mortgage today, the average interest rate would probably be around 4.5% and it could go even higher on that.
  • Deposit rates in Ireland are still quite low but they are improving. The best rate you can get in Ireland is 2% whereas in Europe, you can get rates of maybe 3.5% or more. 
  • There is a big push on banks to improve the rates for savers, however, if deposit rates go up, it will most likely be at the expense of higher mortgage rates. This will put pressure on mortgage holders and first-time buyers. 
  • We can either have cheap mortgage rates or great saving rates but we can’t have both. 
  • Banks in Ireland such as Bank of Ireland and AIB have announced huge profits for the first six months of the year with Bank of Ireland taking in €1 billion in net profits, leading many to wonder if a windfall tax on banks should be brought in here. 
  • In Italy, the government placed a windfall tax on banks to stop them from making huge profits.
  • Daragh believes the levy on banks in Ireland could be increased and some of the profits the banks are making could be used to help people who are maybe in long-term arrears or maybe just for other social services that are out there.
  • However, we must be careful not to overly tax these banks as a big banking levy could lead to a collapse in the share prices of the banks. This happened in Italy and millions of pensions are suffering as a result. 
  • The departure of Ulster Bank and KBC from the banking sector in Ireland has led to a lack of competition in the market which has also allowed for these healthy profits. 

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