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Interest Rates – Irish Paying €82k More on €300K Mortgage Over 30 Years

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Interest Rates – Irish Paying €82k More on €300K Mortgage Over 30 Years

Interest Rates – Irish Paying €82k More on €300K Mortgage Over 30 Years
February 18
09:39 2020

Commenting on the Central Bank report on retail interest rates for December, Brokers Ireland said Irish mortgage holders are paying 1.51% more than the euro area average and it is costing them approximately €229 more every month on a €300k mortgage over 30 years and a massive €82K over the lifetime of the mortgage (See detailed examples below).

Rachel McGovern, Director, Financial Services at Brokers Ireland which represents 1,250 Broker firms, said:  “These rates are unjustifiable, particularly since savers on the other side of the equation are not getting any benefit, both borrowers and savers are being squeezed and the winners are the lenders. The situation maintains despite the fact that the issue has been highlighted with much political heat being brought to bear on the issue. It points to the lack of sufficient competition in the Irish market.

Rachel McGovern, Director of Financial Services at Brokers Ireland which represents 1,300 impartial broker firms throughout Ireland.

“Irish consumers are losing out of every front, paying unconscionable interest rates and not having better euro area type mortgage products such as 20 year fixed mortgages that enable people to plan their financial futures with confidence,” she said. “This is not just bad for consumers, it is ultimately bad for lenders too because over time consumers are likely to migrate to or find newer developing forms of borrowing.”

She said the money foregone by Irish borrowers is not just a massive loss of this amount of money, it is also a lost opportunity for this money to be used by consumers for other critical financial planning needs, such as pension planning or children’s education.

Encouraging mortgage holders to be alert to the value of switching Ms McGovern said many mortgage holders are now coming to the end of a five-year fixed interest rate period and there is much better value to be got by switching. “By shopping around consumers can substantially reduce their repayments. And it has the added advantage of stimulating greater competition between lenders,” she said.

She said mortgage holders can benefit from rising house prices of recent years with 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,” she said.

COMPARISONS – IRELAND VERSUS EURO AREA

Country Loan Amount Term Rate Monthly Payment Annual Payment Overall Payment
Ireland €300,000 30 years 2.88  €1245.48 €14,945.76  €448372.80
Euro area €300,000 30 years 1.37  €1016.75  €12,201.00  €366030.00
Difference 1.51  €228.73  €2,744.76  €82,342.80


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