In a recent development, mortgage rates in Ireland have continued to fall, offering some relief to homebuyers. However, this positive trend is accompanied by a decline in interest rates on savings, impacting savers across the country.
Figures from the Central Bank show that the average mortgage rate fell slightly to 3.77% in March, down from 3.79% in February. This reduction places Ireland with the sixth highest mortgage rates in the Eurozone, an improvement from the previous month. The Eurozone average rate remained unchanged at 3.33%.
The decline in mortgage rates is expected to continue, with predictions that home-loan borrowing rates could drop to 3% by the end of the year. This is largely due to the European Central Bank’s (ECB) anticipated rate cuts, which have already led to seven reductions since last June. Economists expect further cuts as the ECB’s inflation target comes into view.
Daragh Cassidy, head of communications at mortgage broker bonkers.ie, noted that mortgage rates are now at their lowest level in almost two years. He highlighted recent rate reductions from AIB and smaller lenders like Núa Money, suggesting that further decreases are likely if the ECB continues to cut rates.
While falling mortgage rates are good news for borrowers, savers are facing challenges as interest rates on deposits decline. The average interest rate on household deposits fell from 2.33% in February to 2.26% in March. This drop is attributed to the recent ECB rate cuts, which have put pressure on savings and deposit rates.
Irish households held €162 billion in deposit accounts as of March 2025, with about 86% of this held in current or overnight accounts. This is a decrease from a peak of 94% in late 2022. The decline in interest rates on savings means that savers are earning less on their deposits, which could impact their financial planning and savings goals.
The mortgage market in Ireland is dominated by major lenders such as Bank of Ireland, PTSB, and AIB. However, competition is expected to increase with the entry of new players. Spanish-owned Avant Money, which now has a banking licence in Ireland, is set to launch deposit products soon. Additionally, Goldman Sachs is reportedly in talks with the Central Bank about launching its digital bank Marcus in Ireland.
Fiona McMahon, Senior Mortgage Advisor at NFP Ireland, commented on the slow pace at which banks are passing on ECB rate cuts to borrowers. She noted that while tracker mortgage holders have seen some benefits, banks have been slow to reduce rates for those on fixed or variable rates. This is partly because banks did not increase rates as sharply as the ECB during the last tightening cycle, and therefore feel less pressure to reduce them now.
Lower mortgage rates should improve affordability for homebuyers, bringing down monthly repayments and allowing borrowers to qualify for slightly higher loan amounts. This is particularly helpful for first-time buyers who are already stretched with rising property prices. However, cheaper money often fuels higher demand, and with housing supply still insufficient, this could push prices further out of reach.
