The average interest rate paid on new mortgages in the Irish market fell to 2.68 per cent in June 2022, down from 2.74 per cent in the same month last year.
The average rates charged to Irish mortgage holders remain above the euro zone average of 1.9 per cent, although the gap has narrowed in recent months, with the euro zone average rising as the Irish one has edged lower.
Figures from the Central Bank of Ireland show that the weighted average rate on new fixed-rate mortgages, which accounted for 88 per cent of all new agreements during the month, was 2.52 per cent. This was lower than the 2.61 per cent recorded in June 2021 and is also down slightly on the rate recorded in May this year.
The share of the market accounted for by fixed-rate loans rose from 83 per cent in May, suggesting more borrowers were persuaded to choose fixed rates ahead of the anticipated European Central Bank (ECB) rate increase in July.
For new variable-rate mortgage agreements, interest rates averaged 3.75 per cent in June, up from 3.4 per cent a year earlier and 3.66 per cent in May. The increased use of fixed-rate mortgages in recent years has resulted in higher volatility in the variable averages.
Holders of variable-rate mortgages will recently have received notification of an increase in their repayments following the ECB’s announcement last month that it is increasing its main refinancing rate from its historic low of 0 per cent to 0.5 per cent.
The zero rate had been in place since March 2016 but has been hiked in response to soaring rates of inflation across the euro zone, with more ECB rate increases expected before the year end.
Brokers Ireland welcomed the further narrowing of the gap between the Irish and euro zone average rates but said this was “of no practical effect” to borrowers, who it argued should now “concentrate on getting the best mortgage rate available” ahead of expected further ECB rate increases.
Some lenders have already moved to increase the long-term fixed rates they offer on new or renegotiated mortgage agreements, said Brokers Ireland director of financial services Rachel McGovern.
Meanwhile, the total volume of new mortgage agreements came to €827 million in June, up 20 per cent on June 2021 and up 19 per cent on the figure seen in May.
The volume of new consumer loans increased 12 per cent year-on-year to €169 million, with these loans having an average interest rate of 7.72 per cent, the Central Bank said.