Irish Mortgage Holders Paying Substantially More

Thu Nov 12 2020

As today’s Central Bank’s retail interest rates for September reveal a continuing, if somewhat improved, gap between Irish and euro area mortgage holders, with Irish consumers paying  2.78pc compared with1.34pc on average across the euro area, a differential of 1.44pc, Brokers Ireland said the differential costs Irish consumers over €78,000 on a €300,000 mortgage over 30 years. (See further figures below).

Rachel McGovern, Director of Financial Services at the organisation which represents 1,225 Broker firms, said: “The rate published by the Central Bank today applies to new mortgages taken out in September.  However, there are thousands of mortgage holders who have taken out mortgages over the last number of years who are paying more than this, substantially more in some cases. If you are in a position to switch and have not reviewed your situation you could be in for a very pleasant surprise,” she said pointing to Central Bank research from the end of last month that identified 182,272 ‘eligible switchers’.”

She said interest rates have dropped gradually from around 5pc to 6pc in the last decade until 2016 when they dropped to the high to mid 3pc range, and today are at an average of 2.78pc as of September.

And she said mortgage holders who feel they need the security into the future of knowing what their repayments will be, should consider longer-term fixed rates, which can now run for periods of up to ten years.

“Up to relatively recent times fixed interest rates were only available for periods of up to three years. However, this situation has improved with several lenders now offering fixed rates for up to ten years, although we see no reason why such rates should not be available for periods of 20 years or longer, as in some other countries.”

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.  Ms McGovern said the interest rate differential for SMEs was even steeper than those for mortgage holders, in today’s Central Bank data.

“The SME situation is far worse, with Irish SMEs borrowing amounts up to €250k having to pay an excess of almost 3pc on their counterparts in the euro area.”

In today’s Central Bank figures Irish SMEs are paying 4.95pc on new loans with SMEs in the euro area in general paying a substantially lower 1.98pc.

Below: Comparisons between Ireland and the euro area average for mortgages and SME loans and for mortgages.


Comparisons between Ireland and the euro area average for mortgages:

RateLoan AmountTermRateMonthly PaymentAnnual PaymentOverall Payment
Ireland€ 300,00030 years2.78€ 1,229.50€ 14,754.00€ 442,620.00
Euro Area€ 300,00030 years1.34€ 1,012.48€ 12,149.76€ 364,492.80
Difference001.44€ 217.02€ 2,604.24€ 78,127.20
RateLoan AmountTermRateMonthly PaymentAnnual PaymentOverall Payment
Ireland€ 250,00030 years2.78€ 1,024.58€ 12,294.96€ 368,848.80
Euro Area€ 250,00030 years1.34€ 843.74€ 10,124.88€ 303,746.40
Difference001.44€ 180.84€ 2,170.08€ 65,102.40
Comparisons between Ireland and the euro area average for SME loans:
RateLoan AmountTermRateMonthly PaymentAnnual PaymentOverall Payment
Ireland€ 100,0005 years4.95€ 1,884.83€ 22,617.96€ 113,089.80
Euro Area€ 100,0005 years1.98€ 1,751.90€ 21,022.80€ 105,114.00
Difference002.97€ 132.93€ 1,595.16€ 7,975.80
RateLoan AmountTermRateMonthly PaymentAnnual PaymentOverall Payment
Ireland€ 50,0005 years4.95€ 942.42€ 11,309.04€ 56,545.20
Euro Area€ 50,0005 years1.98€ 875.95€ 10,511.40€ 52,557.00
Difference002.97€ 66.47€ 797.64€ 3,988.20


Further information:  Rachel McGovern, Director of Financial Services, Brokers Ireland

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