The European Central Bank (ECB) base rate drives lender mortgage interest rates, when it goes up or down then ultimately so do the mortgage rates in Ireland.
The latest ECB survey of professional forecasters expect the ECB interest rate to stay at 4.5% in the first half of 2024 and then fall back to just over 4% by the end of 2024.
That means the average ECB interest rate across the year in 2024 will actually be 0.5% higher than the rate was in 2023. In worse news they expect rates to stay above 3.5% in 2025 as underlying inflation is proving hard to tackle.
So does this mean mortgage interest rates in Ireland will go up and what does it mean for you?
In a nutshell, mortgage rates Ireland will stay higher for longer and the impact on your monthly repayments is likely to be significant. If you are on a tracker, variable or are one of the 70,000 households on a fixed rate of less than one year you could be looking at rates staying around 5%-6% into 2025.
Don’t panic though, by switching to the best fixed rate you can probably still reduce your monthly repayments as there are still fixed rates available below 4%. If you need advice on your options talk to a mortgage broker who has access to all the rates on the market, you can book a free advice call with a broker now using the button below or read on to get our in depth analysis of the market for each mortgage type.
Check out moneysherpa’s analysis for RTE news below or read on to understand what the mortgage rate increases mean for you (including our new simple tool for calculating the impact of rate changes for you) and to get the inside track on what to do about it.
ECB Interest Rate Increases – Mortgage Interest Rates Go Up Ireland 2024
The latest ECB Survey of Professional Forecasters came out this Autumn.
The survey uses forecasting data from finance experts across Europe to predict the likely direction of interest rates.
The average prediction is that ECB interest rates will stay at 4.5% until the second half of 2024 and drop slightly to 4.25%, before falling back to 3.25% in 2025. This sounds pretty realistic with UK interest rates are already over 6% with US rates over 5%.
Some of the European experts surveyed though see interest rates climbing toward 5% as the ECB struggles to tamp down inflation.
It’s worth remembering that back in the nineties interest rates hit over 10%, so although many believe rates will come down from the current peak, no one really knows how high they might get this time around or how long rates will stay high.
Mortgage Rates Ireland – Mortgage Interest Rates Ireland 2024
Tracker Mortgage Holders
If you are one of the 300,000 tracker mortgage holders in Ireland, these mortgage rate increases will be passed directly onto you. A tracker mortgage ‘tracks’ the ECB interest rate and range between 0.5% above the base rate to 2.25%, with the average tracker in Ireland having a rate of 1.15%.
If ECB interest rates stay at 4.5% then,
- 1.15% tracker = 1.15% + 4.5% = 5.65%
Every 0.25% increase adds around €18 a month on average and mounts up because mortgages are usually taken out over a long period. Each 0.25% is actually an increase of €2,000 across the average mortgage term remaining of 11 years.
Variable Mortgage Rate Holders
The 175,000 variable rate mortgage holders have gotten a temporary stay of execution as the main Irish lenders have held off passing on ECB interest rate increases to customers. It is still possible though that these rates will be passed on over the next six months as the banks seek to catch up.
In a recent report the Irish Central bank assumed that 60% of the ECB interest rate increases will ultimately be passed on to variable rate customers. At a 4.5% ECB interest rate that would make the rate passed on around 2.7%.
0.7% of the ECB increase has already been passed through by lenders making the average mortgage variable rate in Ireland 4.0% according to the latest data available from the Central Bank of Ireland [1].
At an ECB interest rate of 4.5%,
- 4.0% variable mortgage rate = 4.0% + 2% = 6.0%
- Average Monthly Increase = c€120
Fixed Rate Mortgage Holders
The remaining 235,000 mortgage holders are on fixed mortgage interest rates, this means that lenders can’t pass on the ECB rate increases to these customers. Yet these customers can’t rest easy either.
The average duration of fixed mortgage rate interest deals in Ireland is less than 3 years. This means that many of these customers will emerge out of their fixed rate periods onto the highest rates in a decade.
The average fixed mortgage interest rate is currently around 2.5%,
- 2.5% Fixed will go to 6% variable
- Average Monthly Increase = €400+
Many of these customers believe that they will be able to re-fix at around 2.5% when they come off their current fixed mortgage interest rate deals, but average available fixed rates are already at 4.0% and set to rise further.
The good news is though that all 710,000 mortgage holders are able to act now to protect themselves from these increases. Read on to use our calculator and get the inside track on how to dodge the impending lender mortgage interest rates hike.
Your Mortgage Interest Rate Increase Calculation – Mortgage Interest Rates Ireland 2024
All of the above mortgage repayment calculations are based on an average outstanding mortgage of €200,000, but what does the hike in mortgage interest rates mean for your own mortgage?
No worries, that’s why we built our handy interest rate increase calculator so you can see exactly what mortgage rates going up mean for you.
Your actual increase will vary slightly from the calculator depending on your current mortgage interest rates.
What Can You Do To Dodge The Mortgage Rate Hikes? – Mortgage Interest Rates Ireland 2024
Without taking action over 710,000 mortgage holders face an average monthly increase ranging from around €180 to over €300 depending on where ECB rates actually land.
If you take action now by fixing your mortgage rate for 5 years or more, you can avoid the hikes completely.
There are two options open to you.
- Fix with your current lender
- Switch to a new lender and fix
If you are still in your fixed period, you may think that you will have to pay a ‘break fee’ for breaking out of your existing deal. Actually, due to recent EU legislation that’s unlikely to be the case, so call you bank to double check straight away.
Almost everyone, can fix or switch without penalty.
The best rates are with the ‘non bank lenders’ Avant Money and Haven, who are over 1% cheaper than Bank of Ireland or Permanent TSB, so if you want to get the lowest repayments possible that’s the way to go.
That means switching your lender for the vast majority of people.
See the comparison of the average mortgage interest rates across the term below.
| Fixed Term APRC | Avant Money | MoCo | Haven Mortgages | AIB Mortgage | EBS Mortgage | Permanent TSB | Bank of Ireland | ICS Mortgages | Finance Ireland |
| 3 Yr | 3.97% | 5.21% | 4.00% | 4.09% | 4.20% | 4.61% | 4.60% | – | 6.64% |
| 4 Yr | 3.90% | – | – | 4.19% | – | 4.28% | – | – | – |
| 5 Yr | 3.97% | 5.06 | 4.30% | 4.47% | 4.50% | 4.72% | 4.60% | – | 6.35% |
| 7 Yr | 3.95% | – | 4.60% | 4.58% | – | 4.79% | – | – | 6.04% |
In fact the Avant Money 5 year fixed rate above, is €17,387 cheaper over the full mortgage term than Bank of Ireland’s 5 year rate for the average mortgage.
It should take you about 8-10 weeks to complete a switch to Avant.
Bear in mind though that if you are switching lender, you will need to invest about €1,500 to cover your valuer and solicitor costs, unless you switch to Haven who will give you €2,000 to cover these.
In A Nutshell – Mortgage Interest Rates Ireland 2024
So if you have a mortgage and you don’t act now, you may be looking at a €180-€300 hole in your monthly finances this time next year.
That said, you still have options to dodge these mortgage interest rate hikes completely.
You should look to fix in the next few months.
Call your current lender and confirm there are no break fees, then get in touch with a broker and see if you should switch to a new lender or fix with your current one.
Make sure the broker has all the lenders on board though, so you get the best deal.
Next Steps – Mortgage Interest Rates Ireland 2024
You can read more about switching your mortgage here, how to break out of your current fixed mortgage here, how to fix your mortgage here, fixing your tracker mortgage here, about how to compare mortgages here or how to calculate your mortgage repayments here.
