Commenting on the most recent Central Bank report on retail interest rates for May, Brokers Ireland said not only are Irish mortgage holders paying much higher interest rates than their euro area counterparts but Irish SMEs are being “absolutely fleeced” by comparison with their euro area businesses.
Rachel McGovern, Director of Financial Services at Brokers Ireland, which represents 1,250 Broker firms, said the differential means that Irish SMEs are paying a whopping 3.51 percent more than their euro are counterparts.
“We have never more needed our SME sector than we do now. On the basis of today’s figures an Irish SME borrowing €100k over a five year term would have to repay almost €9.5k more on average than its Euro area counterpart over that five years for the same loan,” she said.
With a €50,000 loan for the same period the differential would be €4,704.60.
“The Government must address this appalling differential in its July stimulus package. The fact remains that lenders can borrow cheaply on international markets. It is hard to understand why they would need to extract an interest rate of 5.11 percent from SMEs.
“Many SMEs across the economy will need interest free loans. Anything less will mean they will not survive. An Tánaiste, Leo Varadkar, promised a ‘radical and far reaching’ programme. It is to be hoped that it lives up to the promise,” she said.
On today’s mortgage interest rate data, Ms McGovern noted that Irish mortgage holders are paying an excess of 1.55 percent more on average than their euro area counterparts.
“This differential costs Irish consumers over €84k on a €300k mortgage over 30 years,” she continued.
She said while more mortgage holders are now switching to get better rates, not enough are doing so.
“There are tremendous savings to be got by doing so, and lenders are now encouraging switching, seeing it as an area in which to compete for people with good repayment capacity,” Ms McGovern asserted.
She encouraged those who have not reviewed their mortgages for some time to do so.
“There are large savings to be got and the switching process has become easier, unlike in the past. If in doubt contact your broker who will undertake the work for you,” she concluded.