Irish mortgage rates fall ahead of expected interest rate hikes by ECB

Central Bank data shows Ireland is now the tenth most expensive country in the eurozone for new mortgages

 After holding off since the Iran war erupted, ECB officials now appear convinced that an interest-rate hike is needed to prevent soaring energy prices from creating a broader inflation surge. 

The average interest rate on new mortgages fell marginally in April, dropping by 2 basis points to 3.5% compared to the previous month.

New data released by the Central Bank on Wednesday placed Ireland as the 10th most expensive in the eurozone for mortgages, down from the 7th spot in the previous month. 

On an annual basis, the weighted average mortgage rate fell by 22 basis points, but still exceeded the euro area average by 5 basis points, the regulator found. 

Commenting on the data, Trevor Grant of Irish Mortgage Advisors (IMA) said that while the average cost of a new mortgage has fallen, borrowers need to be mindful that there could be a limit to how much Irish mortgage rates will fall in the future.

"An ECB rate hike tomorrow looks all but inevitable, and ECB increases could follow by the end of the year." Mr Grant said the expected hike will mark a "significant shift" in policy as it will be the first rate increase in almost three years.

"This could be an opportune time for borrowers to fix their mortgage, if they have not yet done so."

Meanwhile, the weighted average interest rate on new fixed-rate mortgage agreements, which constitute 92% of the volume of new mortgage agreements, was 3.45% in April, down 1 basis point from the previous month and down 10 basis points on an annual basis.

For variable-rate mortgages, the weighted average interest rate was 4.13% in April, 8 basis points up from March and 32 basis points lower annually.

The total volume of new mortgage agreements decreased to €884m in April, reflecting a fall of 2% in 12 months. Renegotiated mortgages totalled €461m in April, which was €47m lower than the previous month but €225m higher than in April 2025.

Despite the expected hike in ECB rates this week, Mr Grant said competition was a bigger factor influencing Irish mortgage rates than monetary policy. 

"There is still plenty of competition out there amongst lenders for borrowers to take advantage of, with several lenders cutting their mortgage rates since the start of the year. 

"Furthermore, the upcoming takeover of PTSB by Bawag could lead to more intensified competition in the market as Bawag might decide to challenge the other banks."

After holding off since the Iran war erupted, ECB officials now appear convinced that an interest-rate hike is needed to prevent soaring energy prices from creating a broader inflation surge. 

That dilemma has some analysts arguing that the ECB should hold off further to assess how persistent the shock will be, particularly as the US and Iran work toward a peace accord. They caution that a premature move could echo the widely criticised rate increases 15 years ago that were later reversed as Europe’s debt crisis deepened.