Increasing rates across the continent

According to a recent poll, Ireland’s average mortgage rate is 2.64%. This is only 0.01% higher than it was the previous month, when it was 2.63%.

Irish rates have decreased as the economies of the rest of Europe have gotten more expensive. With the release of these new figures, Ireland actually dropped out of the top five most costly Eurozone nations for the first time in five years.

Ireland’s rate of 3.10 per cent, is higher than the average rate of 2.21 per cent in the Eurozone. Still, Ireland’s rate is lower than it was a year ago: 5.95 per cent this time last year.

The average interest rate on Irish fixed-rate mortgages is 2.49 percent and 3.77 percent on an Irish variable-rate mortgage.

Ireland now has the Eurozone’s eighth-highest mortgage rates, trailing only Germany and the Netherlands. Households in these countries, on the other hand, tend to take out much longer-term fixed rates than Irish households (up to 20 years or more), which typically have higher rates.

The average interest rate across the continent is increasing. Latvia has the highest average at 3.55, followed by Greece at 3.12 per cent and Estonia at 2.93 per cent. France has the lowest average mortgage rate in Eurozone at 1.59% and Luxembourg follows at 2.00%.

The European Central Bank has been raising rates, and this is not good news for homeowners. They’re likely to increase by another 0.75% to 2% when they meet at the end of this month, and rates may even reach 3% by early 2023. All of these increases will eventually affect mortgage customers; how much depends largely on what banks feel under competitive pressure to do.

The main lenders (AIB, BOI and PTSB) have yet to raise their rates from the 1.25-percent levels they were at when the ECB increased rates last year. This is obviously welcome because their original rates were extremely high. However, smaller lenders such as Avant Money and Finance Ireland have raised their rates by over 2-percent in some cases recently.

“Increasing rates will help take the froth out of the housing market but it won’t necessarily help first-time buyers as their repayments will increase. What’s more, all banks stress test mortgage applicants to see if they can cope with a future rise in interest rates. Some first-time buyers are now finding that they’re failing this stress test as rates go up,” Daragh Cassidy, Head of Communications at said.

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