Irish mortgage rates fall but still twice euro area average

Mortgage interest rates in Ireland nudged down in September but are still almost twice the level of the euro area, according to data published by the Central Bank of Ireland on Friday.

The weighted average interest rate on new mortgages, excluding renegotiations, was 3.43 per cent in September, down 24 basis points year-on-year. The equivalent euro area rate was 1.78 per cent.

The volume of new mortgages in the month amounted to €463 million, bringing the total for the past 12 months to €4.7 billion.

New rate mortgages, which stood at 3.41 per cent in September, accounted for more than two-thirds of all new agreements over the past year. The equivalent euro area share of variable rate mortgages is less than one quarter.

The most pronounced fall in rates for owner-occupied homes was in standard variable rates, which fell 46 basis points to 3.5 per cent over the year to the third quarter. This reflects reductions pushed through by the main banks here.

Fixed mortgage rates for owner-occupied homes also declined. Rates fixed for one to three years fell 27 basis points over the same period.

The Central Bank said the share of fixed rate owner-occupied mortgages in new drawdowns declined over 2016, but remains at just more than one-third of all new home loans.

Buy-to-let

In terms of buy-to-let (BTL) properties, new mortgage rates declined by 20 basis points over the year to the third quarter to 4.73 per cent. However, fixed rate BTL mortgages increased 43 basis points to 4.84 per cent.

The majority of BTL lending is at variable rates, accounting for more than 90 per cent of new drawdowns in the third quarter of this year.

Renegotiated mortgages totalled €485 million in September, with variable rate products accounting for the majority of these loans. The weighted average interest rate for renegotiated mortgages was 3.09 per cent in September.

In terms of deposits, the Central Bank found that interest rates on new household term deposits remained subdued in September at 0.15 per cent.

This represented a decline of six basis points over the past 12 months for depositors. While equivalent euro area rates had a slightly larger decline of 18 basis points over the same period, they remain higher at 0.53 per cent.