Mortgage rates fell below the eurozone average in October but have skyrocketed since

Mortgage rates in the country fell to a new record low in October, central bank figures show.

However they have since risen with AIB, Bank of Ireland, Permanent TSB, Avant Money, ICS Mortgages and Finance Ireland all raising rates recently.

Central bank statisticians said interest rates on new home loans here fell below the euro-zone average for the first time in October.

Interest rates here are now the fifth lowest in the euro zone.

A rate of 2.57 percent for October was down from 2.58 percent in September. This contrasts with an increase in average interest rates in the euro zone by 0.25 percentage points to 2.65 percent.

The average new mortgage rate in Ireland in October was lower than in Germany, Belgium, the Netherlands and even Finland, which until recently had the lowest interest rates in the euro zone at well below 1 per cent.

However, the most recent Irish rate is now likely to be closer to 4 percent, said price comparison site’s Daragh Cassidy.

France again has the lowest average mortgage rate in the eurozone at 1.81%, while Latvia again has the highest rate at 4.31%.

In recent weeks, AIB has raised its fixed interest rates by 1 percentage point. Permanent has raised its fixed rates by up to 0.90 percentage points.

The Bank of Ireland hiked interest rates by 0.25 percentage points.

And Avant Money has increased its rates by as much as 1 percentage point.

And with the European Central Bank set to hike rates by a further 0.5 percentage point at its meeting this week, further rate hikes from all lenders are likely to follow in the coming weeks.

The Governor of the Central Bank of Ireland, Gabriel Makhlouf, has already warned of another mega-hike of 0.5 percentage points.

When this is announced tomorrow week, it means that the annual cost of repaying a €200,000 mortgage has skyrocketed by almost €3,000 in one year.

Nearly half a million mortgage holders in this country have either variable or tracker rates and are therefore vulnerable to higher interest rates.

People whose loans were sold by the likes of Permanent TSB — with mortgages now being serviced by the likes of Pepper and Start — have recently been told their rates have already risen to 6.5 percent.

They have no way to fix it, prompting consumer advocates to say they are “mortgage prisoners.”

Mr Makhlouf, who sits on the Governing Council, said this week the ECB is likely to hike interest rates by 0.5 percentage point next week.

Such an increase increases the cost of repaying a €200,000 tracker with a term of 25 years by €50 per month. Over a year that makes 600€ extra.

Another increase in the ECB’s refinancing rate means that the four increases this year have resulted in the cost of repaying such a mortgage increasing by €2,900 over a full year.

Mr Cassidy said: “I don’t think anyone said earlier in the year that we would have mortgage rates below the eurozone average.

Unfortunately, this will not be the case for much longer. In the last six or seven weeks there have been big rate hike announcements from AIB, Avant Money, Bank of Ireland and PTSB. These increases will all feed into the central bank’s figures starting next month.”

At the moment, the Bank of Ireland’s cheapest mortgage rate is 2.15 per cent, but with some caveats. In a few months, the cheapest rate should be around 4 percent. Mortgage rates fell below the eurozone average in October but have skyrocketed since

Fry Electronics Team

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