Ireland has been known to have one of the highest interest rates on mortgages out of all of the countries in the European Union. High interest rates are not uncommon, due to differentiation of financial records of possible lendees, but a high average rate surely is. According to a survey done by Goodbody stockbrokers, a mortgage rate in Ireland is 1.7 times more than the Eurozone average.
Although this is extremely high, when you take out many of the benefits and cash back opportunities that the Irish banks provide the rate ends up lowering to around 1.25 times more. This rate is still high, leaving some people who have taken out a loan with significant extra costs as the years of their loan repayment diminish.
A recent study by the Central Bank has proven this point, showing that a family who has a loan of €300,000 could pay up to €60,000 extra in a scenario where the loan lasted for 25 years. This is a very large sum of money, all of which is owed to the bank simply for providing a person with the funds necessary to invest in their future.
The banks have high mortgage rates for a variety of reasons. To begin, some rates are high on personal loans because the client that the bank intends to lend to has shown in the past that they had difficulty repaying their loans. This can cause the banks to increase your rate so that they can assure that they will get repaid the amount that they lend.
Beyond consumer aspects, the Irish banks are in fact a money-making facility. In general, banks will charge higher rates in the hopes that they can make the transaction profitable. Today, the amount that a bank makes from loaning money out is far more than previously; some people suspect that this is the banks way of making money back that they had lost in the past.
Additionally, Ireland is a smaller country in comparison to many of the other countries that make up the EU. The availability of lenders within the market is limited in some degree already based on this, and in order to keep up with these gigantic economies of scale the banks must change how they charge.
Overall, the Irish mortgage rates tend to be higher than most other countries in the EU. This causes people who are interested in getting a loan or those that have a loan from having extra funds in their pocket now and in the future.
