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How Much??
Here is what your mortgage would cost you in Europe
As has been pointed out in recent weeks, we don’t exactly get the best deal over here.
RECENTLY THE GOVERNMENT has been making demands that banks cut their variable rate mortgages.
Minister for Health Leo Varadkar said at the start of last month that he felt the banks were treating people “very badly” and the banking sector has been belligerent in the face of threatened action from Finance Minister Michael Noonan.
The average Irish standard variable rate is calculated by the European Central Bank to be 3.38%. The average figure produced by the Irish Central Bank, and the one thought to be closer to market offerings, is 4.2%.
Both of these numbers are considerably higher than what is paid out by our European counterparts.
Taking the example of a house that costs €220,000 with a mortgage paid back over thirty years on 90% of a property’s value, here we work out the difference between paying your mortgage in Ireland and paying it elsewhere in Europe.
Taking the Irish Central Bank’s standard variable rate, the average monthly payment in Ireland would be €1,075, with total interest payments of €167,302 and a total loan of €387,302.
It is worth bearing in mind that making basic comparisons with rates across Europe is a tricky business, as financial products vary from country to country, and the rates listed by the European Central Bank are not necessarily representative of market value.
However, with that in mind, here’s what things are like around Europe…
The Netherlands
Standard variable rate: 2.76%
Monthly payment: €899.30
Savings per month: €175.70
Total interest repayments: €103,748
The Dutch housing market was seriously damaged by the global economic crash. However, 2014 brought economic recovery and house prices are expected to rise by between 1% and 3% this year in comparison to last year. The country anticipates mortgage rates staying low due to quantitative easing by the European Central Bank.
France
Standard variable rate: 2.21%
Monthly payment: €836.46
Savings per month: €238.54
Total interest: €81,125.60
According to French property experts FrenchEntreé, 2015 is a good time to purchase housing in the country. The average price to a foreign buyer for an “average, rural, three-bedroom house” is given as €279,000. It was also found that the average French citizen pays €220,000 for a house.
Germany
Standard variable rate: 2.32%
Monthly payment: €848.82
Savings per month: €226.18
Total interest repayments: €85.575.20
Germany has traditionally enjoyed a reputation as a country that likes to rent rather than buy its property – with only 46% of people owning their own homes. Despite this, house prices in the country have gone up substantially over the past five years. Between 2010 and 2014 they went up by 47% in Munich and 41% in Berlin.
Spain
Standard variable rate: 2.27%
Monthly payment: €843.19
Savings per month: €231.81
Total interest repayments: €83,548.40
The Spanish housing market felt the full effects of the global economic crash. It has only been in the last year that the construction industry has started to recover, albeit average prices still fell by 4.9%. Spain is said to have one million unsold empty housing units.
Cyprus
Standard variable rate: 4.45%
Monthly payment: €1,108.18
Savings per month: – €33.18
Total interest repayments: €178,944
The country in the Eurozone with the highest standard variable rate, Cyprus has a housing market that has seen declines over recent years. According to a KPMG report from last summer, the rates are attributable to the high operating costs for financial institutions and the lack of liquidity in the country.
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