Ireland tops ‘ league table of shame’ for EU mortgage rates
IRELAND has topped the ‘league of shame’ for t he worst mortgage rates in the eurozone.
The average rate for Irish mortgage holders is 2.79% – more than double the rate across the EU, where the average outlay for a new mortgage is just 1.31%.
The league table for November, released yesterday, has Ireland topping the eurozone with Greece despite our average rate being down 0.11% on a year earlier.
Daragh Cassidy, of price comparison website Bonkers. ie, said: ‘The fall in mortgage rates over the past year is obviously welcome and the overall trend does appear to be downward, albeit very, very slowly.
‘Yet while there are some valid r easons as to why mortgage rates are higher in Ireland than they are in the rest of Europe, it’s tough to accept that rates here should be over double the eurozone average, and i t’ s hugely frustrating that they haven’t fallen further.
‘The recent arrival of Avant Money into the market with a rate of 1.95% doesn’t seem to be impacting much on rates yet either.’
An Irish homeowner with a € 300,000 mortgage on the average rate of 2.79% is paying just over €222 a month more than someone on the average rate in Europe.
The difference of €2,674 a year is the same as a free extra month’s salary after tax.
The best way to beat the high rates in Ireland remains switching lender, say experts.
Brokers Ireland director Rachel McGovern said: ‘In the absence of more competition coming via new players in the market, the best force for better rates is for more mortgage holders to switch between existing lenders.
‘While it is the case that Irish banks must hold greater reserves – a legacy of the last financial crisis – nonetheless, there is huge scope for thousands upon thousands of current mortgage holders to achieve substantially better deals by switching.’
Recent Centr a l Bank research found more than 182,000 homeowners are ‘eligible switchers’. In its official rates bulletin yesterday, the Central Bank reported: ‘The weighted average interest rate on new mortgages agreed in Ireland stood at 2.79% in November, down 0.11% on November 2019.
‘The average rate for the euro area was 1.31% in November, although the rate varied across countries. Ireland and Greece had the joint highest mortgage interest rates across the euro area in November.’
Ms McGovern added: ‘Large numbers of existing mortgage-holders are needlessly leaving money with the banks because they have not taken the option of switching for a better deal.
‘Even a 0.5% cut in your interest rate would mean a saving of €25,000 on a €300,000 mortgage over 30 years,’ Ms McGovern said.
Rates in Ireland are high because property repossessions are ‘incredibly low’ by international standards. In most European countries a bank will take back ownership of a property within the space of a year or so if the loan has gone bad.
As repossessions are difficult, there are fewer banks in the market which means less competition. Former European Central Bank chief Mario Draghi once described the Irish market as a ‘quasi-monopoly’.
Because of the crash, banks in Ireland still have a large number of l oans on their books which are either in arrears or are not being repaid at all.
The level of non-performing loans with Irish banks is way in excess of other European countries.
Repossessions ‘incredibly low’