Irish mortgage holders have received encouraging news—mortgage rates have fallen to their lowest level since April 2023. According to the latest Central Bank of Ireland data, the average rate dropped to 3.8% in December 2024, down from 3.97% in November, marking a significant decline over the past year. This shift presents an important opportunity for existing borrowers, particularly those considering mortgage switching, to secure a better deal.
Why Are Mortgage Rates Falling?
The downward trend in mortgage rates is being driven by several key factors:
- European Central Bank (ECB) Rate Cuts: The ECB has been reducing interest rates to stimulate economic growth across the Eurozone. This has filtered down to Irish lenders, prompting them to adjust their mortgage rates accordingly.
- Increased Competition Among Lenders: Banks in Ireland, including Permanent TSB and Bank of Ireland, have responded by cutting their rates to attract new customers. Permanent TSB recently reduced its fixed mortgage rates by up to 0.95%, offering rates as low as 3%. Similarly, Bank of Ireland cut all fixed mortgage rates by 0.5%, with four-year fixed rates now starting at 3.1%, potentially saving borrowers approximately €1,000 on a €300,000 mortgage.
- Market Stability and Economic Conditions: With inflation stabilising and financial markets adjusting to ECB decisions, lenders have been able to offer more competitive rates.
What This Means for Existing Mortgage Holders
For mortgage holders, particularly those on variable rates or fixed terms nearing expiry, this decline in interest rates presents an opportunity to reduce monthly repayments. Lower rates mean borrowers could save thousands over the lifetime of their loan by switching to a better deal.
Mortgage switching activity has already increased, as more homeowners look to move to a more competitive lender and take advantage of the recent rate cuts before any potential reversals.
Is Now the Right Time to Switch?
With rates at a 20-month low, many homeowners are reassessing their mortgage terms. Here’s why switching now could make sense:
- Lower Monthly Payments: A reduced interest rate means immediate savings on repayments.
- Long-Term Savings: Locking in a lower rate now can protect against potential future increases.
- More Competitive Offers Available: Lenders are actively competing for new customers, meaning better deals for borrowers willing to move.
How Ireland’s Rates Compare to the Eurozone
Despite the recent reductions, Irish mortgage rates remain higher than the Eurozone average. As of November 2024, the average mortgage rate in the Eurozone stood at 3.43%, compared to Ireland’s 3.97% at the time. Although the gap has narrowed, Irish borrowers still pay more than their European counterparts.
This disparity highlights the importance for Irish borrowers to shop around and consider switching to more competitive rates available within the domestic market.
What Should Borrowers Do Next?
For those looking to cut their mortgage costs, now is the time to review options. Whether you’re on a variable rate or approaching the end of a fixed term, checking switching offers from different lenders could lead to substantial savings.
Schedule a consultation today and speak to one of our experienced financial advisors! We’ll help you understand your options and make the best financial decisions for 2025 and beyond.
Author: Fran Cooke
