Ireland Tops European New Mortgage Interest Rates – Brokers Ireland Advise Switch to Save

Thu Jan 14 2021

As Ireland today stepped back into top of the European league, along with Greece, in having the highest weighted average interest rate on new mortgages in the euro area in November, the latest date for which figures are available, Brokers Ireland said this is costing Irish mortgage holders well over €80,000 on a €300,000 mortgage over 30 years (see detail below).

Rachel McGovern, Director of Financial Services at the organisation which represents 1,225 Broker firms, said: “In the absence of more competition coming via new players in the market the best force for better rates is for more mortgage holders to switch between existing lenders. While it is the case that Irish banks must hold greater reserves, a legacy of the last financial crisis, nonetheless, there is huge scope for thousands upon thousands of current mortgage holders to achieve substantially better deals by switching,” she said.

While eight in every ten mortgage applicants opted for fixed rates in the three months to November, large numbers of existing mortgage holders are needlessly leaving money with the banks because they have not taken the option of switching for a better deal, she said.

She pointed to recent Central Bank research that identified 182,272 ‘eligible switchers’. “If your home has increased in value in recent years, as most have, and you have not reviewed your mortgage, you are almost certainly eligible for a reduced rate of interest.”

Those who took out loans a few years ago when interest rates were higher and who have not reviewed their situation stand to gain most.

Even a 0.5pc cut in your interest rate would mean a saving of €25,000 on a €300,000 mortgage over 30 years,” Ms McGovern said.

Switching would require a new valuation on your home.

“But the cost of that and any legal fees could be well worth the effort, especially if you have not reviewed your mortgage in a number of years,” she said.  And she said mortgage holders now have options and the same solution will not fit every circumstance. She said Brokers will advise based on individual circumstance.

Comparisons between Ireland and the euro area average for mortgages:

Rate

Loan Amount

Term

Rate

Monthly Payment

Annual Payment

Overall Payment

Ireland€ 300,00030 years2.79€ 1,231.09€14,773.08€ 443,192.40
Euro Area€ 300,00030 years1.31€ 1,008.23€12,098.76€ 362,962.80
Difference001.48€ 222.86€ 2,674.32€ 80,229.60

Rate

Loan Amount

Term

Rate

Monthly Payment

Annual Payment

Overall Payment

Ireland€ 250,00030 years2.79€ 1,025.91€12,310.92€ 369,327.60
Euro Area€ 250,00030 years1.31€ 840.19€10,082.28€ 302,468.40
Difference001.48€ 185.72€ 2,228.64€ 66,859.20

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