What am I missing with bank mortgage interest rates?

Think that’s usually the case, some people prefer a fixed rate for their own future budgeting, sense of stability etc, some people don’t mind the potential risks or benefits of a variable rate

As deposit rates are so low, their profits on mortgages have already increased.

I fixed last year at 1.95% for seven years. Could've got a lower variable rate. Given hindsight, can you see why I fixed.

As for the lender, they have me locked in for 7 years of interest. If I was variable, I'd be shopping round to mitigate the increases in variable rate

All tracker rates have gone up in direct tandem with ECB.

Well can you explain why variable rate mortgages here went from being one of the most expensive to least expensive in Europe over the course of about a year (where ECB raised rates)? And deposit rates didn't budge?

Banks fund their borrowings in the market too - they just seem to be better funded /more stability in funding these days than back in the Tiger era.

While they have access to the market they don't really need it these days. They've more deposits than they need. This is partly because households and firms are financially better off (higher savings less debt) but also because there is less competition and banks leaving l.

The better funding position of Irish banks (or to be more precise the greater reliance on deposit funding) means they are less exposed to movements in policy rates.

Irish banks have increased variable rates they've just not increased them by as much as other countries. We'll get there eventually I would imagine but there are a couple of reasons why they've not been as quick as the rest of Europe:

Competition - the lack of competition on the deposit side means they haven't felt the same funding pressure as banks in other countries. By waiting they reduce the bad press. A year of ECB rate increases and we're conditioned to the idea of a higher cost of borrowing.

The first part of the year those remaining banks were more interested in absorbing the new loans that transferred from Ulster and KBC. Wouldn't surprise me if their systems couldn't handle increasing rates at the same time ... They're mostly transferred now so they can turn their focus to increasing rates.

I don't think mortgage arrears is such a burning issue. Yes there are legacy loans from before the last crisis but the really bad ones have been sold off. The rest have had a decade to pay down the balance. Most new lending over the last decade has been sensible, if not because of the banks own lending standards because of the mortgage rules.

Please reread my post but carefully this time. At no point did I suggest variable rates were not going up.

As for the value of non tracker variable mortgages its €10 billion. That's out of a total mortgage book of €78 billion. I wouldn't describe it as low. It's the equivalent of a years worth of new lending.

Margins are increasing and a year into an a rate hiking cycle Irish banks can't be said to have lead the charge on rate increases. However, at some point they may turn to variable rate mortgages to prop-up/supplement margin growth.