The Central Bank reported a slight decline in Irish mortgage rates in April, a reduction from their substantial level from the prior month. Despite this, homeowners saw minimal respite as the average rate on new house loans continued to hover around a seven-year peak.
The statistics revealed a new mortgage agreement’s average interest rate was 4.24%, falling by 0.07% since March, though this average was 61 basis points higher compared to the same time the previous year.
In contrast, the Eurozone’s equivalent average saw a 3 basis point decrease to 3.81% in April. The current data positions Ireland as having the Eurozone’s seventh-highest rates, an improvement from its prior spot in March according to the Central Bank.
This information arrived ahead of an expected rate cut by the European Central Bank (ECB) in June. The ECB, based in Frankfurt, cut its paramount lending rate impacting mortgage rates by 25 basis points to 4.25%, down from a 4.5% record high.
Financial markets are forecasting two more rate reductions this year; however, the trajectory of interest rates is vague with ECB policymakers neglecting to indicate the likelihood of an approaching cut. An unexpected rise in Eurozone inflation in May to 2.6% implies that the rising cost of prices may be more persistent than anticipated, mirroring the Federal Reserve’s situation in the US where it has postponed its rate cut cycle.
Daragh Cassidy from price comparison website Bonkers.ie remarked, “As predicted, the average interest rate witnessed a decline in April from the record high of the previous month.” He suggested that the rate may gradually decline in the forthcoming months as the rate reductions recently introduced by various lenders begin to reflect in the statistics.
Citing examples, he mentioned that the average first-time buyer can currently secure a fixed rate of less than 4% with institutions such as PTSB and Bank of Ireland. He expressed hope that if the ECB brings down rates once more in the future months, it may exert additional downward pressure on mortgage rates.
However, Cassidy warns that irrespective of the pace or the extent of rate reduction, the numerous mortgage holders on fixed rates that are due to expire in the next few months should prepare for potential increases in repayments.
Currently, numerous individuals who have opted for a fixed-rate mortgage in the last three to four years may be benefiting from interest rates as low as 2% or 3%. However, when they consider re-fixing, they are still typically confronted with considerably higher renewal rates.