Mortgages from credit-servicing firms face higher interest rates, Central Bank data shows

June 10, 2023

The Central Bank has published data showing customers with mortgages at credit-servicing firms face higher interest rates.

The analysis shows that 90% of loans held by the so-called ‘non-bank’ sector that administers mortgages bought up by investment funds, have an interest rate of 6.5% or less.

20% of these loans had interest rates of 6% or higher and less than 1% of loans were on a rate of 8% or higher.

This compared to 90% of mortgages held at banks, which faced interest rates of below or equal to 4.4%.

Non-banks which also engage in lending had lower rates on average, with 90% of their loans on rates of less than or equal to 3.5%.

These rates were recorded for March. There was another 0.25% increase in ECB rates in May, which may have affected those on tracker mortgages and some variable loan customers.

The publication shows that banks held approximately 80% of outstanding home loans. Non-banks accounted for 8% while credit-servicing firms held 13%.

Credit-servicing firms were found to have higher concentrations of home loans both at the upper and lower end of rates charged.

“The variation we see in interest rates increases across the system is due to a number of factors, including differences in the underlying funding models of the different cohorts of mortgage providers in the market and the nature of the mortgage contracts,” said Deputy Governor at the Central Bank, Vasileios Madouros.

He went on to say that “…if the economy continues to evolve in line with our expectations, we are likely to see only modest increases in household financial distress. But this aggregate picture masks very real challenges for some cohorts of households.”

The Deputy Governor encouraged any mortgage holder experiencing difficulties repaying their home loan to contact their provider.

Article Source – Mortgages from credit-servicing firms face higher interest rates, Central Bank data shows – RTE

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