Why are we still paying up to €80k too much for a place called home?
We have the lowest charges ever - but still fork out much so much more than our EU neighbours
YOUR MONEY
IRISH mortgage interest rates have crashed below 2% for the first time in history. This landmark event in 2020 was a rare bright spot in a dark year – a sign of progress at last, although our rates were still high by Eurozone standards. Alas, so few borrowers bothered to switch since then, we’re falling even further behind Eurozone neighbours like the Finns who pay as little as 0.7% for mortgages.
Instead of catching up, we have plummeted further down the Eurozone mortgage competitiveness table to the absolute bottom in recent months.
Ireland had the joint highest average interest rate on new mortgages in the euro area in November, new Central Bank figures show.
With the mortgages at double our EU neighbours’ cheapest rates, this is costing borrowers an extraordinary amount of money.
In our table, we show how you could save up to €27,000 over a seven-year fixed-rate period alone.
But if you maintained this sort of saving for the life of a loan, you would literally save a Lottery-sized sum – up to €80,000 on a €300,000 mortgage over three decades.
Many people aren’t cashing in on the fact that they should be paying less for their mortgages as property prices rise and the debt shrinks.
This makes the all-important loanto-value rate fall – qualifying you for a better deal.
Those who took out loans years ago and who have not reviewed their situation as property prices rose, stand to gain most.
So who has the best deals?
Avant Money leads the way with three, five and seven-year rates of just 1.95% – half Bank of
Ireland’s standard rate.
Ulster and KBC weigh in at just over 2% (for mortgages worth half the property value or less).
‘The best force for better rates is for more mortgage holders to switch between existing lenders,’ said Rachel McGovern, director of financial services at Brokers Ireland.
Central Bank research has identified 182,272 mortgage holders that are highly sought after by lenders who not only offer cheap rates but plenty of goodies too.
Switching does require a new valuation on your home.
‘But the cost of that and any legal fees could be well worth the effort, especially if you have not reviewed your mortgage in a number of years,’ she said.
Many lenders also provide cash sums to help pay for some or all of these legal fees and valuations.