Irish mortgage rates dipped to their lowest level in almost three years in December, new data from the Central Bank shows.
The average mortgage rate for the month was 3.5 per cent, down from 3.53 per cent in November and 3.8 per cent in December 2024. That represented the lowest average rate since February 2023.
However, the cost of a home loan remained the sixth highest in the euro zone, where the average rate was 3.32 per cent.
Rates across the bloc have been narrowing, but continue to vary widely, ranging from as low as 1.98 per cent in Malta to as high as 3.74 per cent in Germany.
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An analysis by price comparison website bonkers.ie shows wide variations also exist within the Irish market.
The group said an average first-time buyer borrowing €300,000 with a 10 per cent deposit can pay variable rates ranging from 3.35 per cent to 4.7 per cent, while rates for a three-year fixed mortgage range from 3.2 per cent to 4.85 per cent.
Daragh Cassidy, spokesman for the group, said lenders have in recent months responded to competition in the market.
“Despite the European Central Bank (ECB) keeping rates on hold since last June, mortgage rates in Ireland have continued to edge lower over the past few months as mortgage lenders have reacted to market competition,” he said.
“And although our rates remain the sixth highest in the euro zone, the gap between the average rate in Ireland and the euro zone average has narrowed to just 0.18 percentage points.
“This time last year the gap was closer to 0.5 percentage points and for many years leading up to 2022 the difference was close to 1.5 percentage points.”
Looking ahead, Cassidy said the ECB could end up keeping rates on hold for the remainder of 2026. “I don’t think mortgage rates will change much more over the coming months,” he said.
“However, Revolut is expected to enter the Irish mortgage market later this year, so depending on how competitive its offering is, that could push rates down a bit.”
Fiona McMahon, senior mortgage advisor with NFP Ireland, said the risk of a rate hike has now “dissipated”.
“As euro zone inflation appears to be under control and the bloc’s economy is showing resilience, the ECB is likely to keep its rates on hold for some time,” she said.
“Indeed, some are forecasting that ECB rates could be on hold for the rest of this year. This could put the brakes on any further falls in average Irish mortgage costs in the near future.
“Having said that, the recent strengthening of the euro could prompt the ECB to cut its rates, and so, many borrowers will be hoping the strong euro continues.”
Trevor Grant, chairman of Irish Mortgage Advisors, said would-be house buyers and existing mortgage holders “need to be mindful” of a limit to the extent to which the cost of Irish mortgages will continue to fall into the future.
“The low and steady euro zone inflation was likely at the heart of the ECB’s decision to keep rates paused last week,” he said. “By the ECB’s own forecasts, this low rate of inflation is set to continue this year – so ECB rates could be on hold for some time yet.
“We have already seen competition at play this year leading to two of the main lenders in the market cutting rates in January.
“It is our view that more lenders will follow suit and cut rates in the coming months, particularly if there is more chance of an ECB rate cut than a rate increase.”
