Mortgage Rate Uncertainty – Mortgage Holders Advised to Consider Long-Term Fixed Rate

Thu Jan 13 2022

Press Release – 13th January 2022

Commenting on today’s Central Bank Retail Interest Rates for November 2021, Brokers Ireland said the 1.41per cent  margin over and above the euro area average that Irish mortgage holders are paying is costing them €2,538.84 per year more than their euro area counterparts and over €76k over 30 years on a €300k mortgage. (See figures below).

Rachel McGovern, Director of Financial Services at Brokers Ireland said these figures relate to new mortgages taken out.

“Latest Banking and Payments Federation Ireland figures show  that existing mortgage holders who stand to gain most are switching to get better value, switching and re-mortgage activity having jumped by an impressive 20.8per cent year-on-year in November.

“Clearly the message is getting through to consumers.  We would like to send a strong message to mortgage holders who are on variable rates to examine the market in terms of genuine long-term fixed interest rates, which are relatively new in the Irish market, although they have been the norm across many euro area countries for many years.

“Mortgage holders can now fix their mortgage rate for periods up to 30 years, and in the historical Irish context these rates are very good, even if still way ahead of the euro area average,” she said.

However, she said there was no need to be unduly concerned at the moment.  “The ECB has given positive commentary about increasing inflation likely to be short-term and therefore, not leading to increased interest rates this year, even though there are some divergent views within the camp.

“And we’re seeing more predictions from economists about the potential for interest rates increases,” she said.

“What is certain now is that uncertainty on the issue has increased as a result of rising inflation, which today’s OECD figures for November indicate is at a 25-year high of 5.8 per cent.

“It would be wise now to plan carefully and considerately for the future and seek advice from a Financial Broker who will tailor it to your own particular circumstances and future plans.” she concluded.

Below figures illustrate the impact of Irish versus Euro area mortgage rates:

Rate Loan Amount Term Rate Monthly Payment Annual Payment Overall Payment
Ireland € 300,000 30 years 2.71 € 1,218.38 € 14,620.56 € 438,616.80
Euro Area € 300,000 30 years 1.3 € 1,006.81 € 12,081.72 € 362,451.60
Difference 0 0 1.41 € 211.57 € 2,538.84 € 76,165.20
Rate Loan Amount Term Rate Monthly Payment Annual Payment Overall Payment
Ireland € 250,000 30 years 2.71 € 1,015.31 € 12,183.72 € 365,511.60
Euro Area € 250,000 30 years 1.3 € 839.01 € 10,068.12 € 302,043.60
Difference 0 0 1.41 € 176.30 € 2,115.60 € 63,468.00



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