Mortgage interest rates in Ireland fell again in May and are now in line with the eurozone average.
It is the first time in more than three years that rates in Ireland have matched the average in the currency zone, according to the Central Bank of Ireland.
The average new mortgage rate was 3.48pc in May. This is down slightly in the month and down from 3.61pc in May last year.
The rate in this country is now 12th out of the 21 countries that use the euro.
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“This average rate matched the euro area average for the first time since March 2023, having exceeded it since then,” the Central Bank said.
Daragh Cassidy, of mortgage broker and price-comparison site Bonkers.ie, said the latest fall in rates means Ireland is no longer one of the more expensive countries in the eurozone for mortgage borrowers, having consistently had above-average rates in recent years.
Mortgage rates across the eurozone continue to vary widely, ranging from 1.92pc in Malta to 4.32pc in Latvia.
However, the improvement may prove short-lived. Last month, the European Central Bank (ECB) increased its lending rates and is expected to raise them again over the coming months. Such a move is likely to eventually feed through to mortgage pricing here.
“Irish mortgage rates have remained fairly steady over the past few months,” Mr Cassidy said.
Daragh Cassidy of Bonkers.ie
He said we have recently seen rate increases from some of the smaller lenders, such as ICS Mortgages and Nua Money. But rates from AIB, Bank of Ireland and PTSB, which together account for around 90pc of all new mortgage lending, have remained unchanged.
“At 3.48pc, the average mortgage rate is now, surprisingly, at its lowest level since early 2023. This is despite rates in many other eurozone countries edging upwards in recent weeks in advance of the ECB’s most recent rate hike,” Mr Cassidy said.
The ECB next meets in just over two weeks, when it could increase its key rate by another quarter of a percentage point.
If the ECB does not raise rates this month, it could increase them later in the year.
“That means it’s likely we’ll see more mortgage lenders raising rates over the coming months,” Mr Cassidy said.
However, the upside is that savings and deposit rates should continue to improve too.
PTSB, Bankinter, Bunq and Raisin have increased some of their savings rates in recent weeks.
Households in Ireland have around €175bn in deposits, up almost €10bn in the last year.
Mr Cassidy said anyone on a fixed-rate mortgage is protected for now, as their repayments will not change until their fixed term ends.
“But borrowers on variable rates should review their options, while anyone due to come off a fixed rate over the coming months should also start comparing what’s available,” he added.
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Thousands of homeowners fixed at rates of around 2pc three or four years ago.
As those deals expire, many will face a significant jump in their monthly repayments when they look to re-fix, especially if they do not shop around for the best available rate, Mr Cassidy said.