Irish paying at least €80,000 more on €300,000 mortgage than EU counterparts

New figures from Central Bank indicate average new mortgage rate fell to 2.98% in July

New Irish mortgage holders can expect to pay at least €80,000 more than their European counterparts on a €300,000 mortgage over the course of 30 years.

Analysis from Brokers Ireland, a lobby group representing 1,250 brokers, found that on a rate of 2.98 per cent, Irish mortgage holders can expect to pay €454,000 back on a €300,000 mortgage while those in the euro area can expect to pay back €374,000.

"This is money that Irish mortgage holders could otherwise be putting towards planning for their children's education or their retirement. It is substantial," said Diarmuid Kelly, chief executive of Brokers Ireland.

Figures released by the Central Bank on Friday showed that the weighed average interest rate on all new mortgages agreed in the Republic stood at 2.98 per cent, down since the beginning of the year but considerably higher than the euro zone average of 1.54 per cent.


The Irish mortgage rate figures for July were second only to Greece, while Finland, Portugal and France offered the lowest rates.


Irish banks have been constrained in substantially reducing their rates because that enforcing security on a mortgage here, for example through repossession, is both more difficult and less common than elsewhere.

But despite the high average rate, Irish banks have been getting increasingly more competitive in recent months. Both KBC and Ulster Bank, for example, offer a 2.3 per cent two-year fixed rate. Bank of Ireland’s lowest rate is a 2.5 per cent rate fixed for five years while AIB offers a four-year fixed rate for 2.85 per cent.

And this type of product is getting more popular, the Central Bank figures show. Some 76 per cent, or €647 million, of new mortgage agreements in July were for fixed-rate mortgages.

Mr Kelly said this trend points towards people “looking for greater security in a world filled with uncertainty, given Brexit and wider global volatility.”

“More lenders are now doing terms of 10 years whereas previously such mortgages were offered typically for periods of up to three years.

“However, it still falls short of what is on offer in some other European countries where such products are offered for periods of 20 years or in some cases for the life of the mortgage,” he added.

Central Bank

A spokesman for the Central Bank said it was aware that Irish mortgage rates are higher than in other countries and pointed to several drivers behind this, including limited competition and low levels of switching between mortgage products, as well as Irish banks having higher cost bases.

He particularly highlighted the more substantial levels of capital Irish lenders must hold to balance against bad loans that are a legacy of the financial crash.

The spokesman also noted that Irish mortgages can be structurally different to their counterparts in other EU countries where, for example, upfront fees might be applied at the start of the loan, or cash back offers that reduce the effective rate might not exist as they do here.

“Irish mortgages have different characteristics from those offered by other EU banks making direct comparison of headline mortgage rates inconsistent,” the spokesman said.

Peter Hamilton

Peter Hamilton

Peter Hamilton is a contributor to The Irish Times specialising in business