The Central Bank in Dublin. Photo: Bloomberg
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Mortgage rates in Ireland skyrocketed in March, prompting a warning that large numbers of borrowers will become delinquent.
Ronan Brennan, head of retail banking services at banking advisory firm Delta Capita, said large numbers of people will struggle to pay their mortgages.
“We have now entered a period of persistently higher interest rates and while this will not only affect day-to-day household budgets, it will also have a greater impact on the mortgage market in general as a significant proportion of mortgage holders may fall behind. on their mortgage payments in the coming months,” he said.
Mr Brennan said people were now facing a situation where they moved from fixed rates to much higher rates, and those who had had tracker rates were now seeing their mortgage rates rise for the first time in over a decade.
“Many households simply do not have the financial buffer to withstand this increased demand on their finances,” he said.
The Central Bank’s figures show that interest rates on loans for people who buy a home are now at their highest level in six years and that further increases are on the way.
The average rate in March was 3.54 percent, according to the Central Bank of Ireland. This is an increase from 2.92% in February. Rates in Ireland rose much more than in any other eurozone country.
But despite the big jump between the two months, Ireland still has some of the lowest mortgage rates available in the Eurozone. Only France and Malta have lower rates.
The eurozone average rose to 3.52%, almost three times as much as about 18 months ago, according to figures from the Central Bank of Ireland.
Last week, the European Central Bank (ECB) raised its key interest rates for the seventh time since last summer. The ECB’s refinancing rate, which determines the tracker rate, has currently skyrocketed from 0%. to 3.75 pc, with the threat of further increases.
This will drive up the cost of tracker rates and lead to higher flat rates for new borrowers and higher rates for those coming from a flat rate. Variable rates at the major banks have not increased much, but may also be in line with increases.