Ireland has once again risen to the top of the league table in Europe when it comes to the interest rates that we pay on our mortgages.
Deposit rates actually went negative meaning banks have been paying the European Central Bank to deposit excess money in its overnight facility, a charge the banks have latterly started passing on to commercial and now even personal customers with very large amounts of cash in their accounts. Officially it's still adopting a 'hold-steady' approach but the tectonic plates of monetary policy look to be shifting faster than we previously thought."It is fair to say that it is most likely not a case of whether interest rates will rise but rather, when they will rise," Trevor Grant, Chairperson of the Association of Irish Mortgage Advisors said, adding that if it happens this year, it will likely be in the latter part of 2022.
This is where mortgages come into the crosshairs and the hit could be significant for those with large borrowings.The immediate hit would be felt by mortgage holders on variable rate products or those lucky enough to have trackers - which are pegged to the ECB base rate, usually with a margin of around 1% or more.
For those on variable rates, particularly those with mortgages that have been drawn down more recently, it could be even more significant. According to the most recent figures from the Central Bank, they accounted for 84% of arrangements in December.However, variable rates and trackers still account for a very significant proportion of the overall stock of mortgages being serviced by householders and investors.
"House prices have been on the rise for a while now and the average cost of a house has increased from €265,000 in 2017 to around €330,000 in 2021," Alison Fearon, co-founder of mortgage switching platform, Switcheroo pointed out.