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Ireland has the second highest mortgage rates in the Eurozone, behind Greece, according to new data from the Central Bank of Ireland.
The figures reveal that the average interest rate on a new mortgage in Ireland in April was 2.77%, down slightly from 2.78% in March.
Daragh Cassidy from comparison website Bonkers.ie pointed out that Ireland was one of only two countries, the other being Malta, to see a fall in its mortgage rates in April.
“These figures show the peculiarities of the Irish mortgage market,” Mr Cassidy said.
“Rates here have been wildly out of kilter with the rest of the Eurozone for years.
“That continues – but this time it’s more positive.
“As rates have been increasing significantly in some countries over the past few months they’ve largely been static here,” he said.
Finland once again has the lowest average mortgage rate among the 19 country Eurozone at just 0.95%, followed by Portugal at 1.07%.
The Eurozone average is 1.59%, its highest level in almost three years and up from 1.46% in March, and 1.26% in April of last year.
By contrast, the average Irish mortgage rate has actually fallen 0.3% compared to April last year.
“The US, UK, Australian and New Zealand central banks have all raised rates recently to help rein in rapidly increasing prices, and it’s only a matter of weeks before the ECB feels compelled to follow suit,” Mr Cassidy said.
“And this will lead to higher mortgage rates here.
“However Irish mortgage rates are so out of kilter with the ECB base rate that we could see a small increase in the ECB rate not being passed on to consumers.
“It’ll somewhat depend on the competitive pressures the banks feel under. However, tracker customers are likely to see an almost immediate increase in their repayments,” he added.
Mr Cassidy said non-bank lenders, which rely almost entirely on wholesale markets for raising funds will be under the most pressure to raise rates.
Reacting to today’s figures, Trevor Grant, Chairperson of the Association of Irish Mortgage Advisors said fixed rates are the only game in town when it comes to mortgages in Ireland at the moment.
“We are seeing a steadily increasing number of movers or second time buyers seeking mortgage approvals with long term flexible fixed rate options attached,” he said.
“This follows the trend set by existing mortgage holders seeking to protect themselves against the imminent future interest rate increases,” he added.
However, Mr Grant warned that many first-time buyers of new homes are being attracted by low “Green rates”.
“These are typically fixed for a shorter period than regular fixed rate offerings, and are often less flexible.
“The value of market-based advice from a broker comes into play once again here, in order to ensure that people fully understand the products on the market and secure the mortgage best suited to their unique circumstances and requirements,” he added.
Meanwhile, Joey Sheahan, Head of Credit at online brokers MyMortgages.ie said lenders in the Irish market are currently competing on their fixed rate offerings, in light of what’s coming down the tracks from the ECB.
“There really has never been a more important time to consider your options and, if possible, to switch to a better rate with your existing lender or move to a new one,” he said.
“The switching movement in Ireland has been gaining momentum in the last few months – we have seen a 39% increase in their own levels of switching activity in the last 12 months,” he added.
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