Irish mortgage rates see third monthly increase in a row

The average interest rate on a new mortgage in Ireland rose for the third month in a row in March to reach the highest level since 2017, new figures from the Central Bank show.

Ireland had an average interest rate of 4.31% in March – the sixth highest rate in the euro zone, up one place from February – according to the Central Bank figures.

Today’s figures also show that the average euro zone mortgage interest rate fell for the fourth month in a row to 3.84%. This means that the gap between Irish and euro zone rates is now at its widest level since July 2022.

Mortgage interest rates varied across the currency bloc from as low as 1.96% in Malta to as high as 6.16% in Latvia.

The Central Bank said that the total volume of new mortgage agreements in March fell by 2% from February to €630m. This marked an annual decrease of 14%.

It also noted that renegotiated mortgages totalled €145m in March compared to €174m recorded in the previous month.

Meanwhile, the Central Bank also said today that interest rates on household overnight deposits remained at 0.13% in March, while the equivalent rate in the euro area was 0.39%.

Commenting on today’s figures, Daragh Cassidy, Head of Communications at Bonkers.ie, said that Irish mortgage rates are now at their highest level since at least August 2017.

“The gap between the average rate in Ireland and the euro zone continues to widen. However this hopefully marks the peak of mortgage rates in Ireland for now,” Mr Cassidy said.

He noted that in recent weeks AIB, EBS and Haven have all cut their green mortgage rates, while PTSB cut its four-year fixed rate for the second time since December.

Bank of Ireland has also introduced a new, flat variable rate of 4.15% for all customers regardless of the loan-to-value ratio whereas previously it was as high as 4.75% in some cases.

He said these lower rates should feed through into the figures over the coming weeks.

Daragh Cassidy also said that from June, it is almost guaranteed that the ECB will start cutting interest rates.

“How aggressively the ECB cuts rates will depend on how fast inflation falls. We’ve seen interest rate cut expectations scaled back quite dramatically in the US and Australia for example. But at present it still seems highly likely that the ECB will cut rates at least more than once this year,” he said.

But he added that despite how quickly or by how much rates fall this year, the thousands of mortgage holders on fixed rates which are due to come to an end over the next few months still need to be preparing for potentially higher repayments.

“Many mortgage holders who took out a fixed rate over the past three or four years may be enjoying rates as low as 2% or 3% at present. But they’ll generally be faced with rollover rates of between 4% and 5% when they look to re-fix over the coming months,” he cautioned.