Irish mortgage rates ease again in December

New figures from the Central Bank show that the average interest rate on new mortgages here eased to 3.50% at the end of December, down three basis points from the previous month.

The Central Bank said the euro area equivalent was 3.32%.

This means that Irish mortgage rates are the sixth highest in the euro zone for the third month in a row.

Today’s figures show that Germany had the highest mortgage rate at 3.74% in December, followed by Estonia at 3.71% and Latvia at 3.69%.

They also reveal that Malta had the lowest rate at 1.98%, followed by Spain at 2.61% and Portugal at 2.84%.

According to the Central Bank, the average interest rate on new fixed rate mortgage agreements, which make up 92% of the volume of new mortgages, was 3.44% in December, down two basis points from the previous month and down 17 basis points from December 2024.

Meanwhile, the average interest rate on new variable rate mortgage agreements was 4.17% in December, up nine basis points from November and 16 basis points lower in annual terms.

In December, the total volume of pure new mortgage agreements increased to €1.4 billion – the highest volume of last year and an increase of 17% compared to December 2024.

Trevor Grant, chairperson of Irish Mortgage Advisors, said the average cost of new mortgages has fallen, given the ECB has kept its rates on pause for the last eight months and is likely to continue to do so for the foreseeable future.

But he added that would-be house buyers and existing mortgage holders need to be mindful that there could be a limit to the extent to which the cost of Irish mortgages will continue to fall into the future.

Mr Grant said that competition and not the ECB is the main influence on home loan rates in Ireland.

“There is plenty of competition out there amongst lenders for borrowers to take advantage of – and we have already seen competition at play this year leading to two of the main lenders in the market cutting rates in January,” he said.

“It is our view that more lenders will follow suit and cut rates in the coming months, particularly if there is more chance of an ECB rate cut than a rate increase,” he said.

He also noted that in line with increasing house prices, average mortgage sizes being drawn down by house buyers have reached record levels in recent months.

“The mortgage market is strong, with recent figures showing that €14.5 billion worth of mortgages were drawdown in 2025 – the highest level since 2008,” he said.

“The recent uplift in housing completions, up 20% in 2025, is encouraging and should bring more buyers into the market,” he added. .