Press Release – Irish Mortgage Holders Paying Over the Odds on Interest Rates

Sun May 10 2020

Commenting on today’s Central Bank report on retail interest rates for March, Brokers Ireland said while Irish mortgage rates have dropped eleven basis points on the previous month Irish mortgage holders are still paying 1.49% more every month over and above their euro area counterparts.  On a €300k mortgage over 30 years, this is costing a massive €80k over the lifetime of the mortgage (See example below).

Rachel McGovern, Director of Financial Services at Brokers Ireland, which represents 1,250 Broker firms, said the improvement is likely to reflect an element of competition creeping into the mortgage market in recent times.

“Competition drives better rates.  There is huge value for consumers to be got in switching between lenders. Yet far too many mortgage holders don’t do so. By shopping around you  can substantially reduce your repayments or force a better rate from your existing lender,” she said. She said even a 0.5% cut in your interest rate would mean €25k  on a €300k mortgage over 30 years.

She said more and more Irish mortgage holders are opting for fixed rate mortgages, with 74% of all new agreements being fixed rates in the three months to March.

“But Irish mortgage holders still do not see the kind of good value long-term fixed interest rates that are available in other European countries, rates for periods beyond 10 years, for terms of 20 years or for the lifetime of a mortgage.”

She said in the current climate consumers are fearful about their futures. “We’re seeing many stopping their pension contributions for the moment,” she said.

The current pandemic is also engendering a risk averse approach among the banks which is going to, unfortunately, impact aspiring mortgage holders, even those with very good prospects for the future.”

She said it is difficult to predict where the current situation will end or what the final fallout will be for consumers.

“But there is no doubt the money foregone by Irish borrowers, as opposed to their European counterparts, represents a lost opportunity for this money to be used for other critical financial planning needs, such as pension planning or children’s education.”

She said there is also an opportunity for mortgage holders who have not reviewed their mortgages in some time and who have seen their house values rising in recent years to benefit from an improved loan-to-value (LTV) ratio.

”Most lenders offer a lower interest rate where there is a better LTV ratio.  But consumers need to be proactive in seeking out a better rate from their lenders.  Now more than ever consumers need to seek the advice of a Broker,” she said.


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