Irish mortgage rates fell to their lowest level in more than two years in May as consecutive rate cuts by the European Central Bank (ECB) have continued to been passed onto customers.
New figures released by the Central Bank of Ireland on Wednesday show that at 3.66%, the gap between the average Irish rate and that of the Eurozone continues to narrow.
The latest Irish figure is down six basis points from the previous month, with the equivalent euro area average decreasing by two basis points to 3.32%.
However, rates varied hugely across the 20-country currency bloc, ranging from as low as 1.8% in Malta to as high as 4.29% in Latvia.
The average interest rate on new fixed-rate mortgage agreements, which constitute 84% of all new mortgage agreements, was 3.49% in May, six basis points lower than the previous month and 53 basis points lower than in May 2024.
Meanwhile, the weighted average interest rate on new variable rate mortgage agreements was 4.57% in May, 12 basis points up from April and 10 basis points higher in annual terms.
However, wide variations also exist within Ireland, with an analysis by Bonkers.ie showing that for the average first-time buyer borrowing €300,000 with a 10% deposit, variable rates range from 3.18% to 4.70%. In addition, rates for a three-year fixed mortgage were found to range from 3.20% to 4.85%.
“There are 10 lenders in the Irish mortgage market at present and there’s a wide variation in rates across them all,” said Daragh Cassidy of Bonkers.ie
“And different lenders offer different cashback deals and incentives, which also need to be taken into account.”
Speaking on the figures, Fiona McMahon, Senior Mortgage Advisor at NFP Ireland said: “Today’s CBI figures confirm that mortgage interest rates in Ireland are continuing to fall but only modestly, and not fast enough to keep pace with wider eurozone trends.
“While it’s encouraging to see movement, Irish borrowers are still paying significantly more than many of their European neighbours, despite recent ECB action aimed at easing borrowing costs.”
“We’re still seeing a cautious stance from many banks, particularly when it comes to passing on reductions to variable and fixed rate customers. Their rationale that they didn’t raise rates as aggressively during the last cycle, may hold technically, but it offers little comfort to homebuyers currently grappling with record-high property values and limited supply.”