Mortgages highest in eurozone

IRISH mortgage-holders pay the highest interest rates in the eurozone, new Central Bank figures show.

This is costing homeowners more than €2,000 a year on a €250,000 loan, as Irish borrowers are paying an average of 3.21% compared to the average eurozone rate of just 1.80%.

It means an Irish borrower is repaying €1,082 a month, but someone in Europe on an average loan is repaying just €900 on a 30-year mortgage.

Irish rates are even higher than those in Greece, which still hasn’t left its financial bail-out programme. The eurozone country with the lowest rates is Finland, where they are below 1%. Fianna Fáil Finance spokesman Michael McGrath is behind a Bill to end cash-back deals in order to force banks to compete solely on interest rates.

‘Mortgage interest rates here are entirely unjustifiable and the banks cannot be allowed to continue to fleece Irish consumers in this way,’ he said.

‘The truth is that neither the Government nor the Central Bank have shown any interest whatsoever in this issue.

‘Both seem happy to allow Irish mortgage-holders and SMEs pay for the most expensive debt in Europe,’ he said.

Finance expert Brendan Burgess, of the askaboutmoney.com website, said: ‘Part of the reason Irish banks’ rates are so high is because of their reluctance to repossess homes, so they have to recoup their losses by charging higher rates. The other reason is there is no proper competition, people are just not switching.’

Another factor is the large number of low-interest tracker mortgages on which banks are making a loss, leading them to hike other rates.

The figures also show the popularity of fixed rates continues to rise, and these now account for 54% of new lending.

Despite the high rates, there was a 33% increase in new mortgage loans in the 12 month up to May compared to the previous 12 months.