Year holds interest rate modicum of hope for consumers - Brokers Ireland

Responding to the most recent Central Bank Retail Interest Rates publication for December showing Ireland with a weighted average interest rate on new mortgages of 4.19%, just 0.13% higher than the euro area average, and six basis points down on the previous month, Brokers Ireland said it is to be hoped that by mid-year the situation will have improved with some movement downwards by the ECB.

Rachel McGovern, Director of Financial Services at Brokers Ireland said, in this regard comments from the Governor of the Central Bank on Wednesday saying the inflation rate does not have to come down to 2pc before rates can be cut, were encouraging.

“However, the people most adversely impacted with high interest rates are those with non-bank lenders and to discover that a legal loophole has prevented them exercising the same rights with the Financial Ombudsman as those whose loans are with banks is unedifying to say the very least. Regulators and policymakers need to work urgently to address the issue. It is blatantly discriminatory,” she said.

Ms McGovern warned that we may be only beginning to see the impact of the ten ECB interest rate hikes that have taken place since July.

“Latest Central Bank figures show that short-term mortgage arrears were up 3% in Q3 last year. Given that it takes at least 18 months for the impact of increases to emerge, the high level of which many economists believe were unjustified, things could get worse before they get better,” she said.

Ms McGovern said the dip in the percentage of new fixed rate mortgages being taken out, down to 81% from 93% in December 2022 is likely to be because fixed rates are becoming less attractive, and people are hoping the ECB rate may fall in the short to medium term.

And she said it was good to see an improvement in deposit rates, which have risen to 2.73% although they are still lower than the equivalent euro are rate of 3.29%


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