Interest rates over 5pc on a third of mortgages held by non-lenders, Central Bank finds

Irish Independent

7 hours ago

Of those, 32pc were paying rates of 5pc or more at the end of March, 2025, the research shows. That compares to the 3.77pc average interest rate on new Irish mortgages in March.
Non-bank non-lenders are typically funds that bought up books of often distressed mortgages in the wake of the financial crisis more than a decade ago.
In many cases the home loans they hold have been through some period of arrears or restructuring, and typically represent a riskier investment for lenders.
By the same token, borrowers whose loans are held by non-lending, non-banks may be less able to switch to lower-cost lenders if they have a history of arrears.
The median interest rate charged by the non-lending non-banks was 4.15pc at the end of March, though more than a fifth carried interest rates above 6.5pc – around three times higher than the European Central Bank's (ECB) main refinancing rate.
While those so-called mortgage prisoners can have few options to finance away from the funds that own their debt, the data also shows non-lending funds also own some of the least profitable home loans in the market, thanks to their books of legacy tracker mortgages.
More than 13pc of home loans held by the non-lending non-banks were paying interest of 0.5pc or less, compared with just a handful of bank or non-bank lender customers.
Separate research from the Houses of the Oireachtas Parliamentary Research Service shows borrowers whose loans are with non-lending non-banks have seen extreme volatility in the past two years, as ECB rates have moved up and down.
In June 2022, 4pc of those mortgage accounts were paying above 5pc interest.
A year later that was up to around 30pc, which equated to nearly 23,500 accounts. By June 2024, around 67pc, or just over 51,000 accounts, held by non-lending non-banks were being charged interest rates above 5pc.
The rates have been declining, however. In March the median interest rate on non-lending non-bank mortgages was 5.5pc.
The latest Central Bank research shows non-banks that actively lend have the lowest median rates in the market, at 3.65pc, compared to banks where the comparable figure was 3.75pc at the end of March.