Irish mortgage holders are much more vulnerable to rising interest rates than homeowners in other EU countries, new research reveals.
Some 85pc of existing mortgages in this country are variable rate mortgages – or crawlers, or a standard variable rate. This means that about 674,000 mortgage holders are at risk of higher interest rates. Only 15pc of mortgage holders here have opted for fixed rates. This works out at 117,000 mortgage holders.
This compares with other European countries where the greatest number of mortgage holders qualifies for the safety of nominal fixed mortgages, a survey by the European Mortgage Federation show.
About a quarter of the German mortgage holders have fixed more than 10 years. In Ireland, just 2.3pc of those with a mortgage fixed for five years or more. About a third of the Belgians to opt for a fixed rate that lasts the duration of the mortgage. This type of product is not available in this market.
Mortgage brokers said the Irish attachment to variable-type mortgages was unusual.
“The figures mean Ireland is one of the most rate-sensitive mortgage markets in Europe,” said Frank Conway of Irish Mortgage Corporation.
The vulnerability of Irish debtors was thrown on the table when the Permanent TSB last week increased the interest rate of its standard variable rate mortgages for the third time in a year.
EBS Building Society raised its standard variable for the second time two weeks ago.
Other lenders are now set to continue their rally in the second standard variable rates, while the European Central Bank (ECB) could move as early as next summer to raise its key rate from a low of 1 pc.
ECB hike variables both standard and mean follow-up rates of the mortgage on the rise.
Mr. Conway said that the interest rate increases announced by the Irish banks since July 2009 flew in the face of continued economic hardship and rising mortgage arrears.
“There is little evidence to suggest that lenders have assessed the economic situation of their clients as well as its ability to absorb the rising costs of mortgages,” he said.
Mortgage arrears statistics from the Financial Regulator show that more than 32,000 mortgage holders are now more than 90 days late.
“While there is no direct evidence that increase the standard variable rate mortgages have resulted in increased incidents of delays, the time of arrears increased in tandem with rising mortgage costs is undeniable,” said Conway .
Fine Gael TD Terence Flanagan had a lack of clarity on the status of mortgage arrears and that it was time for the financial regulator to take control of the situation.
“Currently, mortgage arrears data is being reported to the public on a quarterly basis, two months late. This is totally unacceptable when you consider that the Irish Credit Bureau has complete information in real-time mortgage personal loan and credit card arrears, however, the public is kept in the dark for lack of complete and timely information, “he said.
Incoming search terms for the article:
advice for Irish mortgage holdersRelated posts: