Interest rates on Irish mortgages are now at their lowest level since April 2023.
That’s according to new figures from the Central Bank which show that the average interest rate on new Irish mortgages in December fell to 3.8% - down from 3.97% in November.
The Central Bank said the equivalent euro area average decreased by eight basis points to 3.35% in December.
It noted that mortgage rates in Ireland exceeded the euro area average by 45 basis points, down from 54 basis points in November. Irish mortgage rates were the seventh highest in the euro area in December, the Central Bank added.
Estonia and Italy had the highest average mortgage interest rates in December, while Greece and Slovenia had the lowest.
The latest Central Bank figures show that the total volume of new mortgage agreements increased to €1.2 billion in December, a 13% increase in monthly terms and a 19% increase on the total for December 2023.
Trevor Grant, chairperson of Irish Mortgage Advisors, told RTÉ that the fall in the average interest rate on new mortgages is a trend that should continue throughout the year given the recent ECB rate cuts and the expectation of more to follow.
He noted that at 2.9%, the ECB's key lending rate - the rate which impacts tracker mortgage holders and which also puts downward pressure on variable and fixed rate mortgages - is now at its lowest level in two years.
"As a result, sub-3% mortgage rates could become a reality for many Irish borrowers from this summer, depending on how quickly lenders cut their rates following last month's ECB rate cut and any future ECB rate cuts this year," Mr Grant said.
"This will mark a significant milestone for mortgage borrowers and should lead to substantial savings for homeowners and house buyers. Indeed, Irish mortgage rates could even fall to as low as 2.5% or below in 2025 if the ECB continues to cut its main lending rate in the coming months," he added.
Mr Grant also said that falling ECB rates could also give non-bank lenders more scope to cut their rates this year because non-bank lenders rely more on wholesale funding than the mainstream banks.
"This in turn could potentially trigger a mortgage price war and better mortgage deals for borrowers. Indeed, there is already evidence that this is happening. Non-bank lender Núa Money has just announced that it is cutting mortgage rates and we expect other non-bank lenders to follow suit," he said.
"Some bank lenders - including MoCo, Permanent TSB and Bank of Ireland - have also cut their mortgage rates in recent months," he added.
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