Mortgage rates fall but warning of rising rates


Mortgage rates in the country bucked the trend, falling in April, but homeowners have been warned that the next moves are likely to be upwards.

New figures show that the average rates for new buyers and switching buyers fell slightly to 2.77 percent in April.

This is a fraction of 2.78 percent in March.

The average interest rate on new fixed-rate mortgage contracts, which make up the bulk of all new contracts, was 2.59 percent in April.

This is down 4 basis points from April 2021 and down 1 basis point from the previous month.

According to the Central Bank of Ireland, this country has the second highest mortgage rates in the eurozone.

The average interest rate on a new mortgage in Ireland is second only to Greece in the 19-country Eurozone.

And mortgage holders have been warned that the European Central Bank is likely to signal at a meeting of its Governing Council on Thursday that it is about to reverse decades of policy and start raising its key interest rate.

Around 450,000 homeowners are still using a combination of variable and tracker rates, which will rise as the ECB begins raising its key refinancing rate.

The ECB is expected to announce on Thursday that its asset purchases will end in June, signaling that an increase in its deposit rate is likely to be announced at its July meeting.

According to Conall MacCoille, economist at Davy Stockbrokers, it is possible that the ECB will raise the refinancing rate along with the deposit rate.

A higher refinancing rate immediately makes trackers more expensive.

The fact that variable rates are so high here, with total rates on new mortgages almost double the European average, could mean Irish lenders are reluctant to raise variable rates, according to’s Daragh Cassidy , when the ECB refinancing rate increases.

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

Future fixed interest rates will also rise as the ECB’s main refinancing rate rises.

Some banking experts expect the ECB’s deposit and refinancing rates to increase many times over the next year.

The difference between the average interest rate on new mortgages in this country and the eurozone average means that the service on a home loan in Ireland is around €1,900 higher than the average for the 19 eurozone countries.

This is despite the fact that Ireland, along with fellow Malta, was one of only two countries to see its mortgage rates fall in April.

All other countries saw their average rate increase, central bank figures show.

The euro zone average is 1.59 percent, the highest in almost three years and above 1.46 percent in March and 1.26 percent in April last year.

In contrast, the average Irish mortgage rate is down 0.3 percent compared to April last year.

There has been mixed news on mortgage rates lately.

Permanent TSB, Bank of Ireland and EBS recently cut some of their interest rates.

But ICS Mortgages has hiked its rates twice in the past few weeks, and Avant Money has hiked some of its rates over the past month.

Mr Cassidy, communications director at, said it was only a matter of weeks before the ECB announced rate hikes to counter the fact that euro-zone inflation was 8.1 percent in May.

“However, Irish mortgage rates are so far from the ECB’s base rate that we could see a small hike in the ECB rate not being passed through to consumers.”

Mr Cassidy said any decision on variable interest rates will depend on the competitive pressures banks feel they are under.

But tracker customers are likely to see an almost immediate increase in their prices, he said.

Non-bank lenders, who rely almost exclusively on wholesale markets to raise funds, will come under the most pressure to hike rates, he added. Mortgage rates fall but warning of rising rates

Fry Electronics Team

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