Lowest Mortgage rates in Eurozone: Despite a spate of interest rate increases by the European Central Bank, mortgage costs in this country are among the lowest in Europe. Tomorrow, the ECB is expected to announce the eighth rate hike since last summer.
And another is anticipated in July or September, bringing the total number of ECB interest rate hikes this year to nine, the most aggressive rate hikes in the Frankfurt-based central bank’s 25-year history.
According to the Central Bank of Ireland, Irish mortgage rates increased further in April, reaching their greatest point since at least mid-2017.
The average interest rate on a new mortgage rose from 3.54 percent in March to 3.63 percent in April.
Despite the monthly increase, Ireland’s mortgage rates remain among the lowest in the Eurozone.
Ireland has the sixth lowest mortgage rates among the twenty Eurozone nations.
The average growth rate in the Eurozone increased to 3.57 percent, nearly three times what it was two years ago.
According to Daragh Cassidy of mortgage broker Bonkers.ie, the recent increases in lending rates in Ireland are now reflected in the Central Bank’s statistics.
However, our mortgage interest rates remain among the lowest in the Eurozone. For the time being.
“This is due to the fact that the major banks have been so slow to pass on the ECB rate increases to their mortgage customers,” he explained.
An announcement is anticipated tomorrow that European interest rates will increase for the eighth time, with a further increase expected in July or September. This will increase the cost of mortgages for tracker customers, those leaving an existing fix, and new buyers.
Experts believe that the European Central Bank may then halt rate hikes.
Two more increases will bring the total number of ECB interest rate hikes to nine.
Lowest Mortgage rates in Eurozone despite successive hikes
Tomorrow’s announcement of an increase will result in the ECB’s main refinancing rate increasing to 4%. And it may reach 4.25 percent by September.
This could result in new fixed rates exceeding 5 percent and a typical tracker rate of 5.25 percent.
Each 0.25 percentage point increase in mortgage rates increases the annual installments on a €100,000 loan by approximately €156.
Higher ECB rates will have an impact on tracker holders, householders nearing the end of their fixed-rate deals, new buyers, and some variable-rate borrowers.
Recent calculations indicate that approximately 171,000 Irish tracker mortgage borrowers are directly affected whenever the ECB raises interest rates.
In the next three years, approximately 50,000 householders are expected to exit fixed-rate mortgages, with financial advisors advising them to exit early and re-fix before rates rise further.
Dublin-based specialist bank Investec’s Justin Doyle stated that the bank’s perspective was consistent with the market consensus. Consequently, the ECB will increase interest rates by 0.25 percentage points this week and by the same amount in September.
“Then they will pause with the ECB deposit rate at 3.75pc and the refinance rate at 4.25pc,” he said.
Austin Hughes, an independent economist, anticipates a rate increase this week and again in July.
After that, he anticipates that the ECB will cease raising rates, but he emphasised that further increases cannot be ruled out.
“I believe it will soon cease sleepwalking towards a potential calamity, and the June or July increases will be the final ones.
Unfortunately, the ECB has a poor track record when it comes to excessively tightening monetary policy and having to swiftly reverse its overkill.
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A Closer Look at the Favorable Conditions
Mr. Hughes stated that global energy and food prices are on a downward trend, supply chain disruptions are diminishing, and industrial prices in the Eurozone have decreased in five of the past six months.
Inflation in the Eurozone has reached its zenith, and ‘core’ inflation should also decline further. These factors may indicate that the ECB’s rate hikes are nearing their conclusion.
In the meantime, approximately 9,500 mortgage offenders whose loans are serviced by Pepper Finance will receive letters this week informing them that their interest rates are increasing by up to 1 percentage point.
It means that many of these mortgage holders will soon be paying rates of 6.3%, causing concern that they will fall behind on their payments.
This is nearly twice the rates offered by conventional banks.
Pepper stated that some of its clients with the greatest mortgage interest rates are not affected by this increase.
