Irish mortgage interest rates dropped to their lowest levels in two years in May, the Central Bank of Ireland said on Wednesday, but remained higher than the euro zone average.
The weighted average interest rate on a new loan for home purchase was 3.66 per cent in the Republic in the month. This was down 51 basis points or 0.5 percentage points in the 12 months to the end of May, the Central Bank said in its latest retail interest rate statistical release.
It meant that the average Irish mortgage rate was 34 basis points higher than the euro area average in May, making it the eighth highest in the single currency area, down from 5th place in April.
Darragh Cassidy, head of communications at price comparison website Bonkers.ie, said Irish mortgage rates are now at their lowest rate in more than two years, with more European Central Bank (ECB) cuts in the offing.
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Mr Cassidy said there is a wide variance of rates available across the Irish market, so shopping around and availing of a mortgage broker’s services can be beneficial to borrowers.
Commenting on the figures, Fiona McMahon, senior mortgage adviser at NFP Ireland, said the recent ECB cut has already prompted some lenders to respond, “notably Avant Money, which became the first to reintroduce mortgage rates under 3 per cent since 2022″
However, she said: “That kind of competitive pricing remains the exception, not the norm.”
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Trevor Grant, chairman of Irish Mortgage Advisors, said the downward trend in rates is positive, but Irish borrowers continue to pay a higher price than their euro area counterparts.
“Whilst there are a number of reasons for this, that gap may narrow over the months ahead, but only if lenders continue to respond competitively to changing conditions,” he said.
“The latest Banking and Payments Federation of Ireland (BPFI) data shows that the median mortgage for a first-time buyer has surged by 36 per cent since 2019, now sitting just shy of €300,000,” Mr Grant said. For buyers in high-cost areas, this number is even higher.
“Despite that pressure, mortgage approvals have hit record highs, suggesting buyer appetite remains strong, especially among first-time buyers.”
The Central Bank also said on Wednesday that the total value of new mortgages agreed in May was €943 million, up 15 per cent since the same month last year.
