Average interest rate on new mortgages falls again in March
New figures from the Central Bank show that the average interest rate on new mortgages in Ireland continued to fall to March.
The Central Bank said the average interest rate on new Irish mortgage agreements in March eased to 3.77% from 3.79% in February.
The equivalent euro area average for March was unchanged at 3.33%, which means that Ireland had the sixth highest average interest rate on new mortgage agreements in the euro area in March.
Today’s Central Bank figures show the total volume of pure new mortgage agreements increased to €904m in March, a €125m (16%) increase in monthly terms and a €274m (43%) jump on an annual basis.
It noted that the average interest rate on new fixed rate mortgage agreements, which constitute 77% of new mortgages, stood at 3.58% in March, two basis points lower than February and 61 basis points lower than the same month last year.
The average interest rate on new variable rate mortgage agreements was 4.42% in March,
unchanged from February and 17 basis points lower in annual terms, the Central Bank added.
Meanwhile, interest rates on household overnight deposits stood at 0.13% in March, unchanged since November 2024.
Commenting on today’s figures, Fiona McMahon, Senior Mortgage Advisor at NFP Ireland, said the ECB has made seven rate cuts since initiating its easing cycle last June, and all indications point towards another one this coming June, with the potential for more before the year is out.
“This should signal good news for mortgage holders, but as today’s Central Bank’s figures show, the impact here in Ireland is likely to be more muted,” Mc McMahon said.
She noted that despite the falling ECB rate, Ireland is still one of the most expensive countries in the EU for mortgage rates – we were ranked eighth as of mid-2024 and today we are sixth.
“While tracker mortgage holders will have already seen some benefit, banks have been very slow to pass on cuts to other borrowers, especially those on fixed or variable rates,” she said.
“Their argument is that they didn’t increase rates as sharply as the ECB during the last tightening cycle, and so they’re under less pressure now to reduce them,” she explained.
She sid that for those looking to buy, lower interest rates should technically improve affordability, bringing down monthly repayments and allowing borrowers to qualify for slightly higher loan amounts.
“That’s particularly helpful for first-time buyers, who are already stretched with rising property prices,” she said.
“The flip side, however, is that cheaper money often fuels higher demand, and with housing supply still nowhere near where it needs to be, this could push prices even further out of reach,” she added.
Article Source – Average interest rate on new mortgages falls again in March – RTE