Irish borrowers will pay €80,000 more on €300,000 mortgage than EU counterparts

Irish consumers can expect pay at least €80,000 more than their European counterparts on a €300,000 mortgage over 30 years because of the premium charged by lenders here, according to Brokers Ireland, an umbrella group representing financial brokers.

The group was responding to the publication of Central Bank’s retail interest rates for August, which showed the average rate charged on new mortgages here over the past 12 months was 2.83 per cent, compared to a euro area average of 1.35 per cent.

The 1.48 per cent differential is costing Irish consumers €80,481.60 on a €300,000 mortgage over 30 years, Brokers Ireland said.

The premium levied on Irish borrowers was evidence of a lack of competition in the mortgage market, it added.

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“In the short-term the best advice we can offer consumers is to shop around and not be afraid to switch lenders,” director of financial services at the group, Rachel McGovern, said.

“Since your mortgage is likely to be your steepest outlay financially there are substantial savings to be achieved with some lenders even offering incentives to switch. And it is easier now than it was some years ago. If in doubt contact a broker,” she said.

Interest rates Ms McGovern said interest rates for SMEs were even worse than those for mortgage holders. “The SME situation is far worse, with Irish SMEs borrowing amounts up to €250,000 having to pay an excess of over 3 per cent on their counterparts in the euro area,” she said.

The impact of Covid-19 on the Central Bank’s figures was evident with new mortgage agreements down 38 per cent at €468 million in August.

The figures show fixed-rate mortgages (including renegotiations) accounted for 77 per cent of all new agreements in the three months to August compared with 84 per cent in the euro area.

“The pandemic has impacted many areas of the market, including the fact that lenders have become more risk averse,” Ms McGovern said. “However demand for mortgages remains strong and will continue since there is huge pent-up demand.”