Mortgage interest reductions lag well behind ECB cuts, Central Bank data shows

The weighted average interest rate on new Irish mortgage agreements as of the end of June 2025 was 3.60% - which is down from the 3.61% recorded in May and the 4.11% recorded in June 2024.

The average mortgage interest rate has declined by just over 0.5% in the year to June during which time the European Central Bank (ECB) has cut interest rates nearly in half over eight separate reductions, new data from the Central Bank of Ireland shows.

According to the data, the weighted average interest rate on new Irish mortgage agreements as of the end of June 2025 was 3.60% - which is down from the 3.61% recorded in May and the 4.11% recorded in June 2024.

In the 12 months to the end of June, the ECB has been steadily cutting its main interest rate from 3.75% to 2%.

The eurozone average interest rate now stands at 3.29% with Ireland having the seventh highest rates. Latvia has the highest interest rates at 4.15%, followed by Estonia at 3.73% and Germany at 3.68%.

The average interest rate on new fixed rate mortgage agreements, which constitute 85% of the volume of new mortgage agreements, was 3.52% in June. The average rate on new variable rate mortgage agreements was 4.08%.

Daragh Cassidy of price comparison website Bonkers.ie said there is still a likelihood that the ECB will cut rates once more before the end of the year “meaning mortgage rates should creep slightly lower over the coming months”.

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Mr Cassidy said there is a wide variation in rates across the market and he would encourage consumers to look around when applying for a mortgage.

In total, the value of new mortgage agreements in June increased by €188m to €996m compared to June last year. Re-negotiated mortgages totalled €285m during the month, up €144m year-on-year.

The average interest rate on new consumer loans increased to 7.87% with the total value of these new loans reaching €222m.

The average interest rate offered on household overnight deposits is just 0.13% which has been unchanged over the last seven months. The average interest rate on new household deposits with agreed maturity decreased to 1.87% in June, representing an 88 basis point decrease annually.