The average interest rate on new mortgages in Ireland continued its gradual decline in March, according to the latest figures from the Central Bank. However, Irish borrowers are still paying some of the highest rates in the euro area.
The Central Bank reported that the average interest rate on new Irish mortgage agreements fell to 3.77% in March, down slightly from 3.79% in February. While this marks a continued downward trend, the rate remains well above the euro area average, which was unchanged at 3.33% in March. Ireland now has the sixth highest average rate for new mortgage agreements among eurozone countries.
New mortgage lending activity saw a significant rise. The volume of new mortgage agreements reached €904 million in March — up 16% month-on-month and a notable 43% increase compared to March 2024.
Fixed rate mortgages, which account for 77% of new lending, had an average rate of 3.58% in March, two basis points lower than February and 61 basis points below the rate recorded a year earlier. Variable rate mortgages remained unchanged at 4.42% in March, though down 17 basis points year-on-year.
Interest on household overnight deposits remained at 0.13%, unchanged since November 2024.
Fiona McMahon, Senior Mortgage Advisor at NFP Ireland, said the figures reflect a modest impact of the European Central Bank’s recent rate cuts on the Irish market.
“The ECB has cut rates seven times since last June, and another cut is expected this June,” McMahon said. “While this should be good news for borrowers, Irish banks have been slow to pass on the benefits, particularly to those on fixed or variable rates.”
She noted that Ireland’s mortgage rates, once ranked eighth-highest in the euro area, have now climbed to sixth, despite the overall downward trend. McMahon added that banks argue they didn’t raise rates as aggressively as the ECB during the tightening cycle, so they feel less pressure to reduce them now.
For prospective homebuyers, particularly first-time buyers, lower interest rates could improve affordability by reducing monthly repayments and increasing borrowing capacity. However, McMahon warned that this could have unintended consequences.
“Cheaper borrowing typically fuels higher demand,” she said. “With housing supply still severely limited, we risk pushing property prices even further out of reach.”
The Central Bank’s latest data underscores a growing concern: while interest rates are easing, affordability and supply remain major obstacles in Ireland’s housing market.
