MORTGAGE rates charged by banks held steady in February despite a frenzy of increases from the European Central Bank.

The average rate on a new mortgage was 2.92pc, little changed from the previous month.

However, February mortgage rates are likely to reflect mortgage agreements reached before that month.

This country now has the third-cheapest mortgage rates in the Eurozone with the rate here almost half a point below the average, according to the Central Bank of Ireland figures.

Lending rates are set to keep rising, with the European Central Bank (ECB) expected to announce its seventh rate rise next month.

Ireland and Malta were the only countries to see their rates fall.

The Eurozone average rose to 3.33pc, almost three times the rate it was around 18 months ago.

Head of communications at mortgage broker Bonkers.ie Daragh Cassidy said the figures show that the main banks in this country have been slow at passing on the ECB rate increases to mortgage customers.

This is because they are paying little in interest in the billions of euro in savings they have to subsidise lower mortgage rates.

“Since last July, the ECB has hiked rates by 3.5 percentage points. However, the main banks have only hiked their fixed rates by around 1.5 to 2 percentage points on average. And variable rates have hardly moved at all,” Mr Cassidy said.

He said this “generosity” has largely come at the expense of savers.

“Savings rates in Ireland are still miserable. The best rate is just 1.5pc with Permanent TSB. And Bank of Ireland only pays a maximum of 0.75pc.”

He said deposit rates of more than 3pc are now widely available in Europe.

“In essence, savers are now heavily subsidising mortgage holders. Whether that’s right will differ vastly depending on whether you talk to a mortgage holder or someone with big savings.”

Despite the fall in rates last month, the medium-term outlook is for rates to go up.

The Central Bank mortgage figures for the Eurozone are based on mortgages drawn down in February but which may have been applied for several months before.

“Anyone who applies for a mortgage today will be faced with much higher rate options,” Mr Cassidy said.

He said this is because the ECB is likely to hike rates again next month.

Most market analysts expect a 0.25 percentage points rise in May.

Mr Cassidy said this means more hikes from all lenders are almost guaranteed over the coming months.”

At the end of last month Bank of Ireland said it was again putting up its mortgage rates.

The bank said the mortgage move follows cumulative increases of 3.5 percentage points in European Central Bank rates since July last year.

All fixed rates for new customers, and existing customers who want to lock in to a new fixed rate, have gone up by 0.5 percentage points.

This includes customers who are coming to the end of their fixed rate period and are seeking to re-fix their mortgage, and tracker rate or variable rate customers who wish to move to a fixed rate.

Variable rates and tracker rates remain unchanged.