Irish mortgage rates slightly higher than euro average

Interest rates on new mortgages remained broadly steady in July compared to the previous month, new data from the Central Bank shows.

The average interest rate for new mortgage agreements was 4.06% for the month.

That compares to 4.04% in June.

New fixed rate mortgage rates averaged 4.04%, while new variable rate home loans averaged 4.18%

Despite the small month on month increase though, compared to July of last year, new mortgage interest rates are 1.43% higher.

That is reflective of some of the European Central Bank interest rate increases being passed through to borrowers.

Since July of 2022, the ECB has put rates up by a cumulative 4.25%.

Only some of that increase has so far been funnelled through to mortgage customers, with more expected over the coming months.

The ECB Governing Council will meet in Frankfurt tomorrow, with experts split on whether it will raise rates again or not.

Equivalent euro area average new mortgage rates rose 0.08% between June and July to 3.86%, the data shows.

At the end of July, the rate in Ireland was 0.2% higher than the euro average.

It means Ireland continues to have the eighth lowest mortgage rates in the euro zone.

Overall, the volume of new mortgages agreed in Ireland in July rose 14% compared to June to €870m, but fell 4% compared to July of last year.

Renegotiated mortgages totalled €286 million compared to €249 million in June with an average fixed interest rate of 3.92%.

Joey Sheahan, Head of Credit at MyMortgages.ie said house hunters and borrowers will be hoping that the ECB announces a pause in interest rate hikes tomorrow.

“The uncertainty of interest rate increases of 4.25pc over the past 14 months has wreaked havoc with existing mortgage holders and house hunters alike,” he said.

“Since the ECB started to raise its rates in July 2022, existing tracker mortgage holders have seen their repayments increase by €461 monthly or €5,532 annually, based on a €220,000 mortgage with 15 years remaining.”

“Higher interest rates have also restricted how much house hunters can borrow as the amount of demonstrated repayment capacity banks want to see has increased by as much as €600 monthly for a €300,000 mortgage, meaning banks want to see mortgage applicants save a whole lot more each month.”