Ireland once again has the highest mortgage interest rates in the euro zone. The average interest rate on a new mortgage in Ireland in July stood at 2.73%. This compared to the euro zone average of 1.28%. Ireland is followed by Greece at 2.58% and Latvia at 2.54%. Finland has the lowest average mortgage rate in the euro zone at just 0.71%, followed by Portugal at 0.8%. The average interest rate on new fixed rate mortgage agreements was 2.62% in July, a decrease of 5 basis points on the same time last year. Fixed rate mortgages accounted for 83% of new agreements over the month. For new variable rate mortgage agreements, the average interest rate stood at 3.29% in July. The Central Bank said this marked a decrease of 15 basis points in July 2020, but it added that volumes agreed remain quite volatile. Meanwhile, the volume of new mortgage agreements amounted to €718m in July, an increase of 29% on the same month last year, when volumes had declined significantly due to the Covid-19 pandemic.
Renegotiated mortgages amounted to €324m in July, up 29% on the previous year, while the weighted average interest rate for all renegotiated mortgages was 2.61%. The fall in mortgage rates over the past year is obviously welcome and the overall trend does appear to be downward, albeit very, very slowly. However, it’s still deeply frustrating that rates here remain so high compared to our euro zone neighbors and have done so for so long. According to Banking and Payments Federation Ireland, the average first-time buyer mortgage in Ireland is around €250,000. This means someone borrowing this amount over 30 years is paying over €181 extra a month, or almost €2,200 a year, compared to European neighbors.