NoRegretsCoyote
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The gap between Irish and euro area mortgage rates is longstanding and has been discussed a lot on AAM. Many have wondered if it would ever disappear and if Irish borrowers would be able to get access to credit at rates prevailing for other euro borrowers.
With the global inflation backdrop market interest rates have gone up a lot in the last six months and retail rates usually follow with a lag. A few Irish lenders have signalled rate rises so far but nothing visible in the statistics yet. New mortgages in Ireland fixed for one to five years were at 2.64% in May 2022, exactly where they were a year ago.
Meanwhile the average euro area rate has shot up in the first half of the year, at 1.89% in May 2022 compared to 1.43% in May 2021. See the spike in the orange line below,
It's not fully clear what the reasons are. I know in a lot of European mortgage rates are individually negotiated rather than advertised, so it's easier to push them up when wholesale rates change.
Still, Irish rates are now only 80bps above the rest of the euro area now, probably the tightest it's been in a decade. Is this the long sought-after convergence we've been dreaming of?
With the global inflation backdrop market interest rates have gone up a lot in the last six months and retail rates usually follow with a lag. A few Irish lenders have signalled rate rises so far but nothing visible in the statistics yet. New mortgages in Ireland fixed for one to five years were at 2.64% in May 2022, exactly where they were a year ago.
Meanwhile the average euro area rate has shot up in the first half of the year, at 1.89% in May 2022 compared to 1.43% in May 2021. See the spike in the orange line below,
It's not fully clear what the reasons are. I know in a lot of European mortgage rates are individually negotiated rather than advertised, so it's easier to push them up when wholesale rates change.
Still, Irish rates are now only 80bps above the rest of the euro area now, probably the tightest it's been in a decade. Is this the long sought-after convergence we've been dreaming of?