New research shows that Irish mortgage holders are uniquely vulnerable to rising interest rates compared to many of their EU counterparts, because of the prevalence of variable rate mortgages here.
This follows the Financial Services Ombudsman’s warning yesterday that lenders should not try to move people off low-rate tracker mortgages to higher interest variable ones.
According to figures from the European Mortgage Federation, 84% of mortgages issued in Ireland in the last six months of 2009 were variable.
This makes Ireland one of the most sensitive mortgage markets in the EU, as long-term fixed-rate home loans are more common in the rest of the union.
Almost a quarter of German home loans issued are fixed for more than ten years.
Up to 80% of home loans in Belgium are fixed for the duration of the loan.
Other markets, like the US, have caps on the potential rise in interest charged on variable mortgages.
All mortgage lenders in the Irish market have put their variable rates up by between .5% and 1.5% in the past year, and increases are expected.
This is without any rates increase at the European Central Bank, whose rates have been at 1% since May 2009.