Banks in Ireland are charging interest rates on personal loans that are far higher than the rest of the eurozone, figures released show.

The average interest customers here are paying on borrowed money is 7.49% - way above the eurozone average of 5.06%, Central Bank statistics show.

This comes as the Cabinet scrambled to revise its home energy credit last night as soaring inflation puts increasing pressure on families.

The handout is set to jump from €100 to between €150 and €200, as Cabinet meets today to counteract rising public anger about living costs.

It has also emerged that Irish homeowners are top of the European league when it comes to being charged high mortgage rates.

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As well as expensive personal loan rates, the average new mortgage rate in Ireland is 2.69% - more than double the average eurozone rate of 1.29%. And there is little respite for households as the high cost of borrowing will hurt those hoping to take advantage of the Government's energy-efficiency scheme of homes, with a surge in retrofitting loans expected.

John Lowe, founder of financial advisers Money Doctors, said the interest rate on personal loans was even worse in certain areas of the economy.

Mr Lowe said: '7.49%, that's the average. With the banks, for a car loan you'd be paying 10% or 12%. I think there's an apathy, we haven't time to start shopping around, we haven't time to see if there is a better option.

'Life is fast. You have a priority, and the priority is not to go round looking for a decent car-loan rate or a decent personal-loan rate. People don't care what the rate is as long as you get the money. People are just accepting the rip-off.'

A €20,000 home-improvement loan over ten years at the average rate of 7.49% in Ireland would cost almost €235 a month. But at the average eurozone rate of 5.06% the repayment is around €212 a month - a saving of €276 a year.

Daragh Cassidy, of price comparison website Bonkers.ie, said: 'In other words, Irish consumers would pay almost €2,800 extra in interest over the lifetime of the loan. A lot of the focus in recent times has been on high mortgage rates. But personal loan rates in Ireland are also wildly out of kilter with the eurozone average.'

Even with new Government supports for retrofitting, homeowners still have to fund half the cost themselves.

Mr Cassidy added: 'I think there'll have to be a lot more focus on high loan rates.'

There has been a strong surge in personal loans, with 39,803 worth €344million drawn down in the final three months of last year, worth an average of just over €8,500 each.

The number of loans was up 35% on 12 months earlier with 11,906 personal loans for home improvements and 10,201 for car loans. The cash lent out was evenly divided between the two with a small amount for other reasons, figures from the Banking and Payments Federation show.

The cost of the loans was described as 'very expensive' by Brendan Burgess, of Askaboutmoney.com, who added that people were being 'ripped off at both ends' by the banks.

'It's very expensive, and it's just very difficult for the banks to collect them. If you're taking out a loan and you repay it you are also repaying loans of half of the people that don't pay.

'We don't take action against defaulters in this country so that's why there are very high rates for credit cards, for loans.

'It contributes to some of the high rates for mortgages but it's only a small part of it. Our banks are now beginning to charge customers for deposits and they're charging the highest mortgage rates in the eurozone. In other countries they do pay a little bit for deposits. So we're being ripped off at both ends, absolutely.'

Ireland has reclaimed the unenviable position of having the highest mortgage rates in the 19-country eurozone, the figures from the Central Bank show.

Even at 2.69% in December, the average interest rate is again the highest, followed by Greece at 2.55% and Latvia at 2.26%.

Mr Cassidy added: 'The fall in mortgage rates over the past year is obviously welcome and the overall trend is downward, albeit very slowly. However, it's still deeply frustrating that rates here remain so high compared to our eurozone neighbours... According to Eurostat, Irish housing costs such as rent, mortgage rates, gas and electricity are a staggering 78% above the European average.'

Meanwhile, in some badly needed good news for households, the €100 electricity grant will be increased to between €150 and €200 today. Tánaiste Leo Varadkar said last night that a wider anti-inflation strategy will be needed to help hard-pressed families.

The legislation for the €100 grant passed in the Dáil yesterday evening. The total value of the grant, when VAT is included, currently stands at €113.50. However, one senior Government source said last night that the grant will be increased to between €150 and €200.

When asked if one value was more likely than the other, they said that 'both are possible'.

Another source said that they believed that the grant 'won't be quite double' and will be €150.

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