Irish mortgage rates fall ahead of ECB hikes

The total volume of new mortgage agreements amounted to €840m in July.

Mortgage rates in Ireland have continued to fall despite recent interest rate hikes announced by the European Central Bank.

The Central Bank said the average interest rate on new Irish mortgage agreements in July was 2.63%, down 10 basis points on July 2021.

The figures show the average interest rate in Ireland has fallen for the fourth month in a row while the average for the euro area rose to 2.08%, the highest level in more than five years.

The figures for July mean it is the first time in over two years that Ireland hasn’t been within the top three most expensive countries for interest rates. Greece, Germany, and Latvia all have rates above Ireland's while Spain, Austria, and France have the lowest.

The Central Bank said the average rate on fixed-rate mortgages, which account for more than 88% of all new agreements, was 2.50%. For new variable rate mortgage agreements, the average interest rate decreased 15 basis points to 3.6%.

Mortgage agreements

The total volume of new mortgage agreements amounted to €840m in July. This represents an increase of 17% on July 2021 and a 2% increase on the previous month.

Daragh Cassidy of mortgage switching website bonkers.ie said Ireland finally has European-level mortgage rates but added rates are almost guaranteed to rise in the coming months.

"Unfortunately for homeowners, the ECB has signalled that it will continue to raise rates over the coming months. It’s likely that the ECB will raise rates to around 2% before the end of the year and they may even go close to 3% in 2023," he said.

"Most of this increase will eventually be passed on to mortgage customers. How much depends on the competitive pressures the banks feel under."