Mortgage rates are falling bucking the trend across the eurozone

Mortgage interest rates in this country fell in May, bucking the trend observed in a number of European countries.

And the interest rate gap in Ireland and the rest of Europe has narrowed in recent months.

But rates here are still among the highest in the 19 eurozone countries.

And interest rates will rise across the currency zone next week as the European Central Bank hikes lending rates for the first time in more than a decade.

According to the Central Bank of Ireland, the average interest rate on a new mortgage in this country was 2.73 percent in May. This is the second highest value after Greece in the euro zone with 19 countries.

It’s down from 2.77 percent in April.

Ireland was also the only country to see its mortgage rates fall in May.

All other countries saw their average rate rise, with rates in Germany doubling in the last year.

The euro zone average is 1.76 percent, the highest level in over three years.

This is an increase from 1.27 percent in May last year.

In contrast, the average Irish mortgage rate is down 7 basis points compared to May last year.

There has been mixed news on the home mortgage front in recent months.

Permanent TSB, Bank of Ireland and EBS all lowered some of their interest rates, while ICS Mortgages, Avant Money and Finance Ireland raised some of their rates.

Daragh Cassidy of price comparison site said the figures show the specifics of the Irish mortgage market.

“Interest rates here have been completely out of whack with the rest of the eurozone for years.

“It goes on, but this time it’s more positive. As rates have risen significantly in some countries in recent months, they have remained broadly flat here.”

He said interest rates in Germany almost doubled last year to 2.26 percent.

The European Central Bank has signaled it will raise interest rates, with an announcement expected next week.

Two hikes of 0.25 percent were announced, but a 0.50 percent hike in September could be implemented if high inflation persists.

This will likely affect around 450,000 people who have a tracker or variable rate. And it will mean that future fixed rates will become more expensive.

Every 0.25 percent increase in ECB interest rates costs €30 more in monthly payments on a €250,000 tracker mortgage.

Irish mortgage rates are so misaligned with the ECB’s base rate that we could see a small hike in the ECB’s interest rate not being passed on to consumers, Mr Cassidy said.

It will depend on the competitive pressures banks feel they are under.

TSB acting chief Eamonn Crowley said last month that he believes the bank, like Ireland’s other retail banks, has the capacity to absorb the first round of ECB rate hikes.

The average first-time buyer mortgage in Ireland is around €270,000.

Anyone who borrows this amount over 30 years pays around 131 euros more per month compared to our European neighbors.

Banks in that country defend higher mortgage rates on the grounds that mortgage lending in Ireland is considered risky, partly because banks have difficulty enforcing collateral when a loan defaults.

This means that Irish banks have to hold around three times as much capital to protect themselves against potential credit losses compared to banks in the rest of Europe. Mortgage rates are falling bucking the trend across the eurozone

Fry Electronics Team

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