Skip to content


Fixed rates account for bulk of new mortgage arrangements here

Lenders in the Irish market continued to charge among the highest interest rates on mortgages in June.

According to figures from the Central Bank, the average rate on new agreements was 2.74% in the month.

That was down 5 basis points from the average in June of 2020 when it stood at just below 2.8%.

That puts Ireland second highest after Greece when it comes to interest rates being charged on mortgages across the euro zone.

The average rate across the bloc stood at 1.27% in June.

Fixed rates dominate

Fixed rate arrangements continue to account for the bulk of mortgages here.

In June, 84% of new agreements were on fixed rate terms.

The average fixed rate charged stood at 2.61%, a decrease of 7 basis points in the year.

Avant Money and Finance Ireland recently introduced 30 and 20-year fixed rate mortgage products to the Irish market.

And ICS Mortgages became only the second lender to offer fixed rates of below 2%.

For new variable rate mortgage agreements, the average interest rate stood at 3.4% in the month of June.

That was up 20 basis points, or 0.2%, from June 2020.

However, the volumes agreed remain quite volatile, according to the regulator.

Despite households putting record amounts of cash on deposit over the past year, they are getting very little return for their money.

The average rate offered on household term deposits stood at 0.12% in June.

That was about half the average rate for the euro area.

A more competitive phase for mortgages

Brokers Ireland said the slight improvement in the monthly figures on rates for mortgages was likely the beginning of a more competitive phase in the market.

“The advent of genuinely long-term fixed interest rates, for periods of up to 30 years in the case of Avant Money, is a game changer in the Irish market, bringing it closer to European norms for the first time,” Rachel McGovern, Director of Financial Services at Brokers Ireland said.

“Up to very recent years mortgages were fixed typically for one to five years, and at higher rates than currently. That was a measure of how uncompetitive the market was,” she added.

Ms McGovern reminded mortgage holders to review their current arrangements and consider switching providers if necessary.

“While more people are switching, not enough are and they are needlessly leaving hundreds and thousands of potential savings behind them with their lenders,” she pointed out.

Trevor Grant, Chairperson of Association of Irish Mortgage Advisors, welcomed the recent signs of enhanced competition in the market as well as the introduction of longer term fixed rate offerings.

“If consumer avail of these deals, we should see Ireland slipping down the rankings from the current second highest position in terms of mortgage rates in the euro zone,” he said.

“From a consumer perspective it is extremely positive to see non-bank Lenders so committed to the mortgage market at a time when some Banks have decided to exit,” he added, in reference to Ulster Bank and KBC.

Mr Grant pointed out that non-bank lenders that have come into the market generally have lower costs and this has enabled them to be more competitive.

“They are agile and have clearly demonstrated that they are capable of delivering product development and innovation. This can only be viewed as good news for consumers,” he concluded.

Article Source – Fixed rates account for bulk of new mortgage arrangements here – RTE – Brian Finn

Copyright and Related Rights Act, 2000