BORROWERS in this country are paying thousands of euro more a year for a mortgage than the average in the Eurozone.

This is because Ireland continues to have some of the most expensive new mortgage rates.

And it is despite greater competition coming from non-bank lenders Finance Ireland and Avant Money.

New mortgage rates here are the second highest across the euro area, after Greece, according to new figures from the Central Bank.

It said that the average new mortgage rate in this country in June was 2.74pc, down 5 basis points on the same month last year.

The average for the Eurozone was 1.27pc, although the rate varied considerably across countries. “Ireland had the second highest mortgage interest rate across the euro area,” the Central Bank said.

This means new borrowers are paying around €2,200 more a year for their home loan than the average across the Eurozone.

On a monthly basis the difference works out at €184, according to Daragh Cassidy of price comparison site Bonkers.

Bankers say that regulatory requirements on how much capital they must set aside when issuing mortgages, and the difficulties in repossessing homes when no payments are being made, are the reasons for the higher cost of borrowing in the State.

However, a number of smaller lenders have cut their rates in the past few weeks, although there has been no response from the main players AIB, Bank of Ireland and Permanent TSB.

EBS recently announced cuts to some of its fixed rates, Haven introduced a low “green” rate of just 2.15pc, while last week ICS Mortgages became only the second lender in Ireland to offer a rate below 2pc.

Mr Cassidy said: “However this isn’t yet feeding through into the average rate most households are paying.

“Rates here still remain hugely elevated compared to our European neighbours, even though they are slowly beginning to creep downwards.”

He said we are a long way from getting the low rates our European neighbours are enjoying. But the trend is at least positive, he added

Meanwhile, household savings have continued to increase, up by €1.5bn in in the first three months of the year, according to separate data from the Central Bank.

Increasing deposits and housing assets has led to household net worth reaching a high of €883bn.

The Central Bank said that it should be noted that this may not reflect the underlying experiences of all households, or the distribution of wealth.

The rise in wealth is in contrast to the impact of the pandemic on many households.

Overall, households experienced a fall in pay of €2.5bn in the first quarter of this year compared with the same period last year.

Households have also seen a €3.9bn rise in social transfers, such as the PUP payment and wage subsidies along with a fall in consumption of €2.9bn.

“These counteracting movements lessen the impact of unemployment and the fall in pay experienced by household net worth in aggregate,” the Central Bank said.

Household debt fell by €1.5bn over the quarter, continuing the downward trend in the series, to stand at €128bn.