Irish Interest Rates

By: EconomyWatch Content   Date: 3 November 2009

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In a volatile interest rate market, it can be challenging to predict how high or how quickly interest rates will rise, leaving one’s enterprise with some uncertainty in the budget. Irish interest rates are decided by the Governing Council of the European Central Bank (ECB). Since January 1999, the ECB has been releasing 3 main official interest rates. The ECB deposit rate provides a lower bound or floor for the daily European Overnight Interbank Average (EONIA) market rate. The ECB marginal lending rate provides an upper bound or ceiling for the daily EONIA. The third official interest rate relates to the ECBs main refinancing operations (MROs).

The Irish economy is a highly volatile one. An interesting trend is that public dominated sectors like education and health had the highest rates of inflation. On the other hand, sectors, particularly those exposed to international competition and technological progress, such as clothing and communications, had price levels now comparable to the 1980s.

In the 2000s, the average real interest has been about 0.5%, and there were fewer burdens on the borrowers. However, real interest rates have risen rapidly owing to the credit crisis, reaching about 7% in May 2009. In the late 1990s, real interest rates averaged around 5%.

Irish Interest Rates: Mortgage Rates

Mortgage rates in Ireland are closely linked to the European Central Bank rate, which has just seen several drops since October 2008, and as of September 2009 the rate stabds at its lowest ever at 1%. House sales in Ireland have dropped sharply since early 2008. Some lenders do not deal with brokers.

In Ireland, 100% mortgages are almost impossible to obtain from any lender. The maximum lending is at 92%. Tracker mortgages have been withdrawn for all new customers by all lenders.

Interest rate of mortgages in Ireland is of:

·        Variable Rates

·        1 Year Fixed

·        3 Year Fixed

·        5 Year Fixed

·        10 Year Fixed

There are only two countries in the Eurozone, France and Austria, which have lower mortgage rates than Ireland. The ECB rates were at their peak in September 2008 at 4.25%. The average rate of mortgage in the Eurozone was 5.8% and the average rate in Ireland, according to the ECB, was 5.58%. Due to falling property prices in Europe, mortgage rates in Luxembourg, Portugal and Finland have fallen more than those in Ireland.


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