Interest Rates – Brokers Ireland Calls On Government To Address Interest Rate Inequality

Press Release

Wednesday 12^th March 2025

Responding to today’s Central Bank Retail Interest Rates publication showing Ireland’s weighted average interest rate on new mortgage agreements at end of January was 3.82%, up two basis points, and although still high, the 5^th highest in the euro area, Brokers Ireland said consumers should benefit from the two subsequent reductions in the ECB rate of 0.25% in January and similar again in March.

The organisation said areas of more concern in the interest rate environment are:

Ø  the disproportionately poor savings interest rates offered by the lenders, just 0.13% on overnight deposits in which consumers hold almost €140 billion and

Ø  the very high mortgage interest rates charged by credit servicing firm , ironically to those who can least afford to pay them.

Rachel McGovern, Brokers Ireland Deputy Chief Executive said serious questions do need to be asked about “the inequality of this situation and what can be done to address it.”

She said there are clear answers to both issues.

In relation to poor savings rates she said: “The Government should immediately introduce the recommendations of its own Funds Sector Review to enable consumers get a better return on their money and remove the massive tax disincentives that keep them defaulting to bank deposits with very poor outcomes.”

(For more information see: https://brokersireland.ie/news/brokers-ireland-calls-on-government-to-implement-funds-review-recommendations-now-to-protect-consumers/)

In relation to non-bank lenders she said a new research study this week from the Oireachtas library pointed to possible solutions to those trapped with excessive interest rates, the highest in the market. It found that around seven thousand Irish mortgage customers are paying interest rates of 8.5% and above.

And it highlighted a 2023 study by the London School of Economics suggesting solutions might include: interest-free equity loans to clear the unsecured element of these loans; Government equity loans and a Government guarantee for active lenders to offer affected borrowers new mortgages.

Why wait, Ms McGovern suggested. “We believe most reasonable people would think it’s an injustice to persevere with a policy that sees those who can least afford it being saddled with the very highest rates of interest on their homes.”

She continued; “Solutions have been thought through already, as this study attests.

“We would suggest that Irish policymakers capitalise on this international work and be the first to act.”

Ends

Note: Brokers Ireland operates the ‘Future Financial Experts’ Transition Year programme aimed at communicating good financial skills to students and creating awareness around financial concepts.

Further information:

Rachel McGovern, Deputy Chief Executive, Brokers Ireland

Tel.086-8259938

Mairéad Foley, Foley Ryan Communications

Tel. 086-2556764