Dublin — New figures from the Central Bank of Ireland show the weighted average interest rate on new Irish mortgages stood at 3.5% at the end of January, unchanged from December and 32 basis points lower than the same month last year.
The latest data also shows that the euro area average mortgage rate was 3.39%, meaning Ireland’s rate exceeded the eurozone average by 11 basis points, the smallest difference recorded since November 2023.
Although the average interest rate on new mortgages remained unchanged in January, Ireland fell from sixth to seventh highest in the euro area for mortgage rates.
Across the eurozone, Estonia and Latvia recorded the highest average new mortgage rates in January at 3.84%, followed by Germany at 3.79% and Lithuania at 3.63%.
At the lower end of the scale, Malta continued to record the lowest average mortgage rate at 1.92%, followed by Bulgaria at 2.37% and Spain with an average of 2.69%.
Fixed Rates Dominate Irish Mortgage Market
The Central Bank said fixed-rate mortgage agreements accounted for around 90% of new mortgage lending in Ireland.
The average interest rate on these fixed-rate mortgages stood at 3.44% in January, unchanged from the previous month but 16 basis points lower compared with January 2025.
Meanwhile, the average interest rate on new variable-rate mortgages stood at 4.09%, down 8 basis points from December and 32 basis points lower on an annual basis.
Concerns Over Impact of Middle East Conflict
Analysts have raised concerns about the potential impact of the Middle East conflict on mortgage borrowers.
A prolonged war in the region could push up inflation across the eurozone, prompting the European Central Bank to raise interest rates in an effort to control rising prices.
Higher borrowing costs could place additional pressure on homeowners already facing rising living costs.
While oil prices have eased slightly in recent days, they remain elevated compared with levels before the conflict began. If energy prices continue to climb, households could face the combined impact of higher mortgage repayments and increased energy and everyday bills.
Competition Between Lenders Remains Strong
Financial analyst Trevor Grant said that although geopolitical tensions have increased fears of interest rate rises, competition between lenders remains a key driver of mortgage pricing in Ireland.
He noted that several lenders have already reduced mortgage rates since the start of the year, giving borrowers opportunities to secure better deals.
Grant also pointed to the ongoing sale process involving Permanent TSB, suggesting that a potential takeover could further increase competition within the mortgage market.
“A new owner of PTSB might decide to challenge the other banks more aggressively, which could lead to lower mortgage rates for borrowers,” he said.
Borrowers Urged to Consider Fixing Rates
Grant added that if the Middle East conflict continues and inflation rises again, borrowers may wish to consider fixing their mortgage rates to protect themselves from possible future increases.
“It’s difficult to predict how long the conflict will last,” he said. “But fixing a mortgage could help shield borrowers from potential interest rate rises if inflation begins to climb again.”
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