Interest rates for new mortgages in Ireland fell below the eurozone average in October for the first time since the Central Bank started tracking the data in 2017.
The average interest rate on a mortgage agreed in October was 2.57%, a decrease of one basis point month-on-month, while the equivalent eurozone average rose 25 basis points to 2.65%.
For new fixed-rate mortgages, constituting 92% of new mortgage agreements, the average interest rate was 2.46% in October, unchanged month-on-month but down 15 basis points year-on-year.
New mortgages agreements in October were valued at €1.1bn, an increase of 39.6% year-on-year, and there was a further €1.05bn in renegotiated mortgages, 97% of which were at fixed rates, up from €675m in September, with a higher weighted average interest rate of 2.69%
Ireland now has the fifth cheapest mortgage rates in the eurozone behind Germany, Belgium, the Netherlands and Finland, which until recently had rates of below 1%, following the European Central Bank's decision to up their rates from 0% to 2%.
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France once again has the lowest average mortgage rate in the Eurozone at 1.81% while Latvia has the highest rate at 4.31%.
Price comparison website Bonkers.ie said October was likely the lowest point in the current mortgage rate cycle for Ireland, however, and that rates will likely come close to 3% in the new year and over 4% by the end of 2023.
AIB has raised fixed rates by one percentage point while Permanent TSB has raised fixed rates by 0.9 percentage points, and Bank of Ireland has raised fixed rates by 0.25 percentage points in light of the ECB hikes.
Non-bank lenders such as Avant Money have also raised their rates, and the ECB is expected to increase interest rates by a further 0.5 percentage points later this week.
"Over the past five or six years, mortgage rates in Ireland have been around 1.3 to 1.5 percentage points above the eurozone average," said Darragh Cassidy, head of communications at Bonkers.ie.
"Whether that historical margin remains will be interesting. Or perhaps Irish rates will finally be similar to Eurozone rates, albeit at a much higher level.
"Looking forward things don’t look great for those on trackers or those who are looking to buy over the coming months."
He added: "The ECB is almost guaranteed to hike rates by at least another 0.5 percentage points when it meets tomorrow and by at least another 0.25 percentage points when it meets again in February.
"This means yet more rate increases from all the lenders are likely in the New Year. At the moment the cheapest mortgage rate is 2.15% with Bank of Ireland, albeit with several caveats. In a few months’ time, the cheapest rate is likely to be around 4%."
The average interest rate on new consumer loans rose 22 basis points to 7.78%, and the total volume of consumer loans increased 23.5% year-on-year to €163m, the Central Bank said.
(Pic: Getty Images)
