In a statement, Alan Hartley, the director of homebuying at Bank of Ireland, emphasized the broad applicability of the new rates: “These reduced rates are available to all new and existing customers from today and they apply all the way up and down the BER scale, not just to those homes with the best energy ratings.”

The bank is also introducing a new 1-year fixed-rate mortgage without a cashback option, starting at 3.3% for loans of €250,000 or more. Notably, variable and tracker mortgage rates remain unchanged.

In addition to its mortgage adjustments, the Bank of Ireland has revamped its deposit offerings. A new 18-month ‘Advantage Fixed Term Deposit Account’ has been launched with an Annual Equivalent Rate (AER) of 2.98%. Meanwhile, the 24-month fixed-term deposit account, previously offering an AER of 2.96%, will be discontinued. Customers using the new 18-month deposit account will be permitted to withdraw up to 25% of their savings balance during the term.

These measures indicate the bank’s commitment to providing competitive financial solutions amid evolving market demands.

For unregistered cars without a tag or video account, the M50 toll will increase by 10 cents. However, cars on eight other national toll roads won’t see a price hike, except for the M4 Kilcock to Kinnegad, where the toll will also go up by 10 cents.

Transport Infrastructure Ireland (TII) announced these changes today, stating that toll increases can’t be higher than the inflation rate.

There are ten toll roads in Ireland, including the M50 eFlow and the Dublin Port Tunnel, both managed by TII.

Unregistered cars on the M50 will pay 10 cents more, making the toll €3.80. This doesn’t affect drivers with a registered tag or video account.

Unregistered buses, coaches, and lighter goods vehicles will also see a 10-cent increase, bringing their toll to €4.80.

Heavy goods vehicles (HGVs) over 10,000kg with an account will pay 10 cents more, while those without an account will see a 20-cent increase.

The Dublin Port Tunnel toll will rise from €12 to €13 for southbound traffic during morning peak times to keep space for HGVs, which can use the tunnel for free at all times. Other tolls at the Dublin Port Tunnel will stay the same next year.

Buses, coaches, and HGVs on the M1, M3, M4, M7/M8, N18 Limerick Tunnel, and N25 Waterford toll roads will see a 10-cent increase, making the toll €4.10, except for HGVs under 3,500kg on the M3.

HGVs over 3,500kg on the M4 Kilcock to Kinnegad will see a 20-cent increase.

Toll charges will stay at €1.20 for cars on these eight roads, except for the M4 Kilcock to Kinnegad, where there will be a 10-cent increase.

Toll rates are adjusted for inflation, with a 1.7% increase from August 2023 to August 2024 starting January 1, 2025.

Money from tolls collected by TII, along with government funding, is used to maintain national roads.

On 17 October 2024, the ECB lowered its key deposit rate by 25 basis points to 3.25%. This move is part of a broader strategy to stimulate economic activity in the eurozone, which has been lagging behind other major economies such as the United States. The ECB’s decision reflects a shift in focus from combating inflation to supporting economic growth.

Recent data indicates that inflation in the eurozone has slowed significantly, with the rate dropping to 1.7% in September, below the ECB’s target of 2%. This decline in inflation has provided the ECB with the leeway to cut rates without the risk of overheating the economy. ECB President Christine Lagarde emphasised that the disinflationary process is well on track, and the latest economic indicators have shown weaker-than-expected growth.

The ECB’s rate cut is expected to provide relief to borrowers, particularly those with tracker mortgages, who will see immediate benefits from lower interest rates. However, the reduction in rates also means lower returns for savers, which could impact consumer spending and savings behaviour.

The eurozone’s economic performance has been underwhelming, with growth rates trailing behind those of other major economies. The ECB’s decision to cut rates for the second consecutive month is a clear indication of the challenges facing the region. The central bank’s Governing Council has stated that it will continue to monitor economic data closely and make decisions on a meeting-by-meeting basis.

Economists have noted that the ECB’s actions are necessary to support the eurozone’s fragile recovery. Simon Barry, an economist, mentioned that the ECB is poised to deliver its first back-to-back rate cuts in 13 years due to the latest signals on economic growth and inflation. The central bank’s approach aims to balance the need for economic stimulus with the goal of maintaining price stability.

In Ireland, the ECB’s rate cut is expected to lower mortgage costs for nearly 200,000 borrowers. This reduction will provide some financial relief to households dealing with high living costs. However, the broader economic implications of the ECB’s decision will depend on how effectively the rate cuts stimulate economic activity across the eurozone.

The Irish economy, like many others in the eurozone, has been affected by the sluggish growth and low inflation environment. The ECB’s measures are aimed at reversing these trends and fostering a more robust economic recovery.

Looking ahead, the ECB has not committed to a specific path for future rate cuts but has indicated that it will keep policy rates sufficiently restrictive for as long as necessary to achieve its inflation target. The central bank’s cautious approach reflects the uncertain economic environment and the need to respond flexibly to changing conditions.

Despite numerous government reforms aimed at reducing insurance costs, premiums continue to climb. The introduction of the Personal Injury Guidelines, which aimed to lower compensation awards for minor injuries, has not curbed the upward trend in insurance costs. The Alliance for Insurance Reform has highlighted that these increases are occurring even as insurers report record profits.

Brian Hanley, the chief executive of the Alliance for Insurance Reform, pointed out that while the cost of labour and parts has contributed to the rising premiums, it does not fully explain the extent of the increases. He emphasised that injury awards have decreased since the new guidelines were implemented, yet premiums continue to rise.

The rise in motor insurance premiums is part of a broader trend of increasing insurance costs in Ireland. Health insurance costs have also seen a significant increase, rising by 12% in the year to September, following multiple hikes by major providers such as VHI, Laya, and Irish Life Health. Home insurance rates have similarly increased by 7% over the same period.

Insurers argue that the rise in premiums is due to an increase in claims and the higher costs associated with repairing damaged vehicles. However, consumer groups and business organisations have accused the industry of failing to pass on the savings from government reforms to consumers. They argue that the industry is profiting at the expense of motorists, homeowners, and businesses.

Insurance Ireland, the industry lobby group, has defended the insurers, stating that the figures published by the Central Bank show that insurers have followed through on their commitment to pass on the benefits of the Personal Injuries Guidelines to consumers. They claim that the average written premium has only increased slightly, by 0.5%, to €561 in the first half of last year.

The median asking price for a home in Ireland now stands at €365,000, reflecting a 0.8% increase from the previous quarter. The rise in prices is more pronounced outside the capital, where prices have surged by 8.5% over the year, bringing the median asking price to €315,000. In Dublin, the annual increase was 6.2%, with the median price reaching €455,000.

Several factors contribute to this upward trend. One significant driver is the limited supply of homes. As of September, there were 13,100 homes listed on MyHome.ie, a figure significantly lower than pre-pandemic levels. This shortage is exacerbated by the reluctance of potential sellers who fear they might not secure a new property after selling their current one.

Economic factors also play a role. The relaxation of Central Bank mortgage lending rules for first-time buyers has increased the share of first-time buyers with higher loan-to-income ratios. Additionally, average earnings have risen, which has helped drive up mortgage approval values.

In Waterford, house prices have seen a substantial increase. In Waterford City, prices in the third quarter of 2024 were 3% higher than a year previously, with the average price of a home now at €250,000. In the rest of Waterford, prices rose by 8% over the same period, with the average price reaching €348,000.

The overall housing market in Ireland remains under pressure due to the country’s population growth, which has been 1.9% for the second consecutive year. To match the UK’s housing-to-population ratio, Ireland would need to build an additional 206,000 homes.

Despite the challenges, there are some positive signs. New housing starts have risen to 49,000 in the year to July, and MyHome.ie expects completions to increase sharply next year to above 40,000 units. However, the impact of build cost inflation and elevated energy costs remains a concern.

In addition to these factors, the report highlights that one in seven properties are now selling for 20% over the asking price, indicating a highly competitive market. This trend is particularly evident in Dublin, where the demand for housing continues to outstrip supply.

The report also notes that the average time to sale agreed was just 12 weeks in the third quarter, close to a historic low. This rapid turnover is a clear sign of the high demand and limited supply in the market.

Conall MacCoille, Chief Economist at Bank of Ireland, commented on the situation, stating that the rising population and economic growth are reminiscent of the Celtic Tiger era. He emphasised the need for a significant increase in housing supply to meet the growing demand.

Joanne Geary, Managing Director of MyHome.ie, expressed optimism about the future, noting that the increase in housing starts and expected completions are positive signs. However, she also stressed the importance of sustained efforts to address the imbalance in the market.

The Irish housing market is experiencing significant price increases driven by limited supply, economic factors, and population growth. While there are efforts to increase housing supply, the market remains tight, and prices are expected to continue rising in the near term.

Detailed Breakdown of Key Budgetary Measures

1. Enhanced Support for Cost of Living: Recognizing the pressures on households, the government has allocated a €2.2 billion package to mitigate the impact of rising living costs. This initiative includes a universal energy credit spread over three payments, aiming to cushion the blow from high energy prices.
2. Wage Increases and Welfare Enhancements: In a move to support lower-income families and stimulate economic activity, the minimum wage will be increased to €13.50 per hour. Additionally, all welfare payments, from pensions to disability allowances, will see a weekly increase of €12, injecting more disposable income into the economy.
3. Tax Adjustments for Greater Relief: Budget 2025 makes several adjustments to the tax regime to provide relief to taxpayers and stimulate economic growth. Key changes include an increase in the income tax standard rate band, adjustments to the Universal Social Charge, and a significant rise in the rent tax credit which doubles the benefit for jointly assessed couples.
4. Investment in Public Services: Public services see a robust influx of funds with a notable focus on health and education. The health sector receives a 22% increase in funding for acute hospitals, addressing the growing demand for healthcare services. Education benefits from extended support for schoolbooks and additional allocations for special education needs.
5. Infrastructure and Environmental Investments: The government has committed €3 billion to infrastructure, emphasizing water and energy projects to enhance Ireland’s resilience and sustainability. This investment is critical for supporting Ireland’s long-term environmental goals and immediate infrastructural needs.
6. Housing and Property Measures: In response to the housing crisis, the budget introduces changes to property taxes and incentives for residential development. Stamp duty on bulk residential purchases sees an increase, and a new higher rate for high-value properties aims to encourage equitable property distribution.

Comprehensive Impact Analysis These measures from Budget 2025 are designed to create a buffer against economic slowdowns while laying the foundation for future growth. The focus on both immediate relief and long-term investment allows Ireland to address current economic challenges and prepare for future opportunities.

Prospective Outlook The full impact of these measures will unfold over the next fiscal year as they are implemented. Close monitoring and timely adjustments will be essential to ensure that the goals of economic stability and growth are met. This proactive and comprehensive fiscal planning positions Ireland on a path toward a more prosperous economic future.

The bank is reducing its five-year green mortgage rate by 0.25 percentage points, bringing it down to 3.2% for properties with a Building Energy Rating (BER) of B3 or higher. Additionally, AIB is cutting its four-year fixed rate for mortgages of €250,000 and above by 0.25 points, making it available from 3.7%. These new rates will be available to both new and existing customers starting tomorrow.

AIB’s Managing Director of Retail Banking, Geraldine Casey, emphasised the importance of offering a variety of choices, value, and convenience for customers seeking to buy their new home. She noted that this latest cut aligns with AIB’s strategy to support customers in making more sustainable choices.

The rate reductions come in the wake of the European Central Bank’s (ECB) recent decision to lower its key lending rates for the second time this year. This has prompted other lenders, including Bank of Ireland, PTSB, and Avant Money, to also reduce their rates.

Broker Michael Dowling of Dowling Financial welcomed the rate cuts, highlighting that the reduction on AIB’s green rate will save borrowers approximately €13 a month for every €100,000 borrowed. AIB has also extended its approval in principle period from six to 12 months, giving customers more time to find and buy their new home.

The latest cuts are part of AIB’s broader strategy to remain competitive in the market. Martina Hennessy, Managing Director of broker Doddl.ie, pointed out that AIB’s non-green rate offerings had become higher than those of competitors, prompting the bank to make these reductions. She added that the cuts could save customers around €500 a year.

AIB’s latest rate cuts are seen as a positive development for the mortgage market, potentially leading to further reductions from other lenders and providing significant savings for borrowers.

Cost-of-Living Supports

One of the key components of Budget 2025 is a substantial cost-of-living package worth approximately €1.5 billion. This package is designed to provide relief to households struggling with rising living costs. It includes lump-sum payments to welfare recipients and new energy credits, although these will be less generous than the previous year’s payments. Despite the ongoing need for such supports, some economic think tanks argue that the current economic conditions may not justify these measures.

Tax Reductions

A significant highlight of the budget is the introduction of a major income tax and Universal Social Charge (USC) reduction package, amounting to €1.4 billion. The government aims to ensure that no individual earning the average wage will be subject to the higher rate of income tax. This will be achieved through adjustments to the tax bands and an increase in the tax credit. These changes are expected to provide substantial relief to middle-income earners and stimulate economic activity.

Social Welfare Enhancements

Social welfare recipients are set to benefit from a range of enhancements. The budget includes a €12 increase in weekly payments for pensioners, carers, and people with disabilities. Additionally, there will be two social welfare bonus payments before the end of the year, providing further financial support to vulnerable groups. The government is also focusing on addressing child poverty, with measures aimed at supporting children in need. However, a two-tier child benefit system has been ruled out, ensuring that all children receive equal support.

Energy Credits

Households can look forward to another round of energy credits, although these will be less than the three payments of €150 provided last year. The government is considering phasing out these subsidies as the worst of the energy crisis has passed. This move reflects a shift towards more sustainable and long-term solutions for energy affordability.

Inheritance Tax and Rent Tax Credit

In response to rising property prices, the inheritance tax threshold is expected to increase from €335,000 to €400,000. This adjustment aims to alleviate the financial burden on families inheriting property. Additionally, the rent tax credit, which was increased to €750 last year, is likely to rise to €1,000. This measure is intended to provide relief to renters facing high housing costs.

Minimum Wage

The Low Wage Commission has recommended an increase in the minimum wage to €13.70 per hour. While the government is expected to follow this recommendation, it is not yet guaranteed. If implemented, this increase will benefit low-income workers and help address income inequality.

Public Spending and Infrastructure

Budget 2025 will include a spending package of €6.9 billion, focusing on public services and infrastructure. This includes pre-committed spending from previous budgets and new policies to be announced. The government aims to invest in critical areas such as healthcare, education, and transportation, ensuring that public services are adequately funded and improved.

Inflation in the eurozone has decreased significantly from a peak of 10.6% in October 2022 to around 2% now. This reduction in inflation has prompted the ECB to consider multiple rate cuts to ease the financial burden on borrowers. The ECB’s Governing Council is expected to announce these cuts in their upcoming meetings, with the first reduction anticipated in September and another likely in December. 

Tracker mortgage holders are set to benefit the most from these rate cuts. Approximately 180,000 customers in Ireland, representing about a quarter of the mortgage market, have tracker mortgages. These borrowers can expect two interest rate cuts within the next three months, including a special one-off reduction. The ECB’s technical adjustment to its interest rates, scheduled for September 18, will further align the refinance rate with the ECB deposit rate, resulting in a 0.35 percentage point reduction for tracker mortgage holders. 

The anticipated rate cuts are expected to bring substantial financial relief to homeowners. Each 0.25 percentage point reduction in the ECB refinancing rate translates to a saving of approximately €13 per month for every €100,000 outstanding on a mortgage over a 15-year term. This means that homeowners with tracker mortgages could see their annual repayments decrease by around €156 for every 0.25 percentage point cut. 

The ECB’s decision to cut rates is influenced by recent inflation data from major eurozone economies, including Germany, Spain, and Ireland, which indicate a slowdown in price increases. This trend has led financial markets to price in further rate cuts, with analysts from Investec predicting a 0.25 percentage point cut next month and another in December. Additionally, Investec forecasts a full percentage point of cuts next year, further easing the financial strain on borrowers.

The CRU has justified this increase by highlighting the need for continuous investment in the electricity grid, operated by EirGrid and ESB Networks. The funds will be used to build, maintain, and operate both the transmission and distribution networks. This investment is crucial as Ireland transitions towards a decarbonized society, requiring a robust and modernized electricity infrastructure.

The new charges will add approximately €8.42 per month to household electricity bills, translating to an annual increase of around €100. This rise comes after a period of no increases last year, which was due to an adjustment for under-recovery from large energy users. The CRU emphasized that this adjustment had previously resulted in households subsidizing big businesses’ electricity bills, a practice that has now been corrected.

However, the decision has sparked criticism from various quarters. Sinn Féin spokesperson for the Environment, Climate, and Communications, Darren O’Rourke TD, has condemned the government’s approach as regressive. He argues that ordinary workers and families are being disproportionately burdened by these increases, especially given that electricity prices in Ireland are already among the highest in Europe. O’Rourke calls for a more equitable distribution of costs and a reform of the current system to ensure that the financial strain is not unfairly placed on households.

The increase in network charges is in addition to the Public Service Obligation (PSO) levy, which is set to cost each household more than €40 over the year. The PSO levy is intended to subsidize the generation of electricity from renewable sources such as wind and solar power. Critics argue that the implementation of these charges has been deeply regressive, with ordinary households bearing the brunt of the costs.

The CRU has acknowledged the financial impact on consumers and encourages households to renegotiate or switch suppliers to find the most suitable tariffs. This advice aims to help mitigate the effects of the increased charges and ensure that consumers can manage their electricity costs more effectively.