New data from the Central Bank of Ireland reveals that interest rates on new mortgages have dropped by half a percentage point over the past year, reflecting a broader easing in financial conditions across Europe. However, Irish homebuyers are still facing higher borrowing costs than their counterparts in the euro zone, paying an average of 3.79% compared to the euro zone average of 3.33%.
Despite the decrease, Ireland continues to have some of the highest mortgage rates in the euro zone, with homebuyers paying 0.46 percentage points more than the average rate across other eurozone countries. This positions Ireland as the fifth most expensive country for mortgages within the currency union.
The reduction in mortgage rates comes after a series of rate cuts by the European Central Bank (ECB), as inflation has moderated and the cost-of-living crisis has shown signs of easing. The ECB’s actions, aimed at cooling inflationary pressures, have provided some relief to consumers, yet Irish borrowers continue to face a premium in comparison to other eurozone countries.
Alongside mortgage rates, the Central Bank also reported a slight decrease in interest rates on new consumer loans, which stood at 7.29% in February 2025. Although this marks an increase of 0.42 percentage points from the previous month, it is still down 0.23 percentage points compared to a year ago.
However, as interest rates have fallen, the returns for savers have also declined. The average interest rate for term deposits has decreased by 0.26 percentage points over the past year, now sitting at 2.33%. Meanwhile, overnight deposits have remained unchanged at 0.13%.
While the easing of interest rates offers some relief for borrowers, particularly in terms of mortgages and consumer loans, the disparity between Ireland’s rates and the broader eurozone average highlights ongoing challenges for Irish consumers, particularly in the housing market. The Central Bank’s data suggests that despite a broader trend of rate cuts, Irish homebuyers and savers are still facing financial pressures that remain higher than those in other parts of the eurozone.
