Irish mortgage rates still higher than euro area average

Variable mortgage rates charged on new loans in Ireland averaged 3.38 per cent at the end of June, significantly higher than the equivalent euro area rate of 2.02 per cent, according to the Central Bank.

The figures provide more evidence of the punitive rates being charged by banks here as they repair the balance sheets in the wake of the crash.

They show variable rates on new mortgages, excluding renegotiated contracts, averaged 4.1 per cent in the second quarter of 2015.

While there is no direct euro-area equivalent to this metric, this is also understood to be significantly higher than euro area average .

It is estimated that about 300,000 mortgage holders in Ireland are currently on standard variable rates.

In the past, mortgage interest rates tracked movements in the ECB’s main refinancing rate (MRO).

However, since the financial crash, standard variable rates (SVRs) charged here “decoupled” from their traditional correlation with ECB equivalents as Irish banks tried to compensate for loss-making tracker mortgages, which account for almost half of the Irish mortgage market.