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Irish Independent
Irish Independent
Charlie Weston Twitter Email

Mortgage rates fell below Eurozone average in October but have since jumped

Mortgage rates are on the rise.

MORTGAGE rates in this country fell to a new record low in October, Central Bank figures show.

However, they have since gone up with AIB, Bank of Ireland, Permanent TSB, Avant Money, ICS Mortgages and Finance Ireland all increasing their rates lately.

Statisticians in the Central bank said new home-loan rates here fell below the Eurozone average for the first time in October.

Rates here are now the fifth lowest in the Eurozone.

A rate of 2.57pc for October was down from 2.58pc in September. This compares with a 0.25 percentage point rise in average Eurozone rates to 2.65pc.

Ireland average new mortgage rate in October was lower than in Germany, Belgium, the Netherlands, and even Finland, which until recently had the lowest rates in the Eurozone at well under 1pc.

However, the most-up-to-date Irish rate is likely to be closer to 4pc now, said Daragh Cassidy of price comparison site

France once again has the lowest average mortgage rate in the Eurozone at 1.81% while Latvia once again has the highest rate at 4.31pc.

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

Bank of Ireland has hiked its rates by 0.25 percentage points.

And Avant Money has hiked its rates by up to 1 percentage point.

And with the European Central Bank is set to increase rates by another 0.5 of a percentage point when it meets this week, more hikes from all lenders are likely to follow over the coming weeks.

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

If this is announced tomorrow week, it will mean the annual cost of repayments on a €200,000 mortgage will have shot up by close to €3,000 in a year.

Close to half a million mortgage holders in this country are either on variable or tracker rates so are vulnerable to higher rates.

People whose loans were sold by the likes of Permanent TSB – with the mortgages now serviced by the likes of Pepper and Start – have recently been told their rates have already gone as high as 6.5pc.

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

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

Such a rise will add €50 a month to the cost of repaying a €200,000 tracker, on a 25-year term. Over a year that works out at an extra €600.

Another increase in the ECB refinancing rate means the four rises this year will have seen the cost of repayments on such a mortgage rise by €2,900 over a full year.

Mr Cassidy said: “I don’t think anyone would have said at the start of the year that we would have mortgage rates below the Eurozone average.

However, this is unlikely to be the case for much longer unfortunately. Over the past six or seven weeks there have been big rate hike announcements from AIB, Avant Money, Bank of Ireland and PTSB. These hikes will all start feeding through into the Central Bank figures from next month onwards.”

At the moment the cheapest mortgage rate is 2.15pc with Bank of Ireland, but with several caveats. In a few months’ time, the cheapest rate is likely to be around 4pc.


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