Mortgage rates reach lowest level since May 2023 as lenders make cuts

Tomas Doherty

The average interest rate on new Irish mortgages fell to 3.97 per cent in November, the lowest since May 2023.

The latest figures released by the Central Bank came as PTSB announced it would cut its fixed mortgage rates, with some commentators predicting a price war.

PTSB is introducing significant cuts of between 0.15 and 0.95 per cent across its range of fixed-rate products.

It is likely that other lenders will now follow suit in the coming weeks.

Brokers Ireland, a representative body for insurance and financial brokers in Ireland, said mortgage interest rates are gradually moving in a beneficial direction for consumers.

Rachel McGovern, Brokers Ireland deputy chief executive, said while competition is improving in the mortgage market, it has some way to go yet.

"About 90 per cent of new mortgage writing is held by just three lenders – AIB, Bank of Ireland and PTSB, with the first two writing over 70 per cent," she said.

"But with increasing competition it is to be hoped that we will see, not just further improved interest rates but better mortgage products, hopefully with a return to good, genuinely long-term fixed interest rates, akin to those of other jurisdictions, not the three to five year fixes that have dominated the Irish market."

Trevor Grant, chairperson of Irish Mortgage Advisors, said the fall in the average interest rate on new mortgages is a trend that should continue this year.

"Markets are forecasting another four ECB [European Central Bank] cuts this year – with most of them expected in the first six months of 2025. This could see the average interest rate on new mortgages drop substantially in the coming months," he said.

"In time, falling ECB rates should make their way to variable and fixed rate mortgage customers. The recent fixed rate mortgage cuts announced by a number of banks is evidence that this is already happening.

"Indeed, we could see multiple fixed and variable mortgage rate cuts this year. Homeowners and house hunters should get ready to make the most of these falling rates."