The average mortgage interest rate rose in September for the first time since January, raising concern that the trend towards cheaper mortgages may have “come to an end”.
Central Bank figures indicate that the weighted average interest rate on new mortgages here rose marginally to 3.59 per cent in September from 3.58 per cent in August. However, rates remain almost half a percentage point lower than in September of last year.
The equivalent euro zone average was 3.34 per cent, the regulator said, making Ireland the seventh most expensive jurisdiction for home loans in the bloc.
The figures come after last month’s decision by the European Central Bank to keep interest rates steady following a recent run of cuts. With inflation across the euro zone running at close to 2 per cent and interest rates on hold at 2 per cent, analysts believe Frankfurt policymakers may have reached their desired rate.
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“The increase in the average interest rate on new mortgages will be a huge concern to Irish homebuyers,” said Trevor Grant, chairman of Irish Mortgage Advisors.
“This is the first time since January that the cost of mortgages has increased and could be a signal that not only has the trend of falling mortgage costs come to an end, we could now be entering a cycle of rising mortgage rates,” he said.
“The ECB has paused its rates for three times in a row now,” Mr Grant said.
“With all indications suggesting that the ECB will keep its rates on hold again when it meets before Christmas, mortgage holders need to be mindful that it’s unlikely there will be any more ECB rate cuts before the end of the year and possibly even during the first half of the new year,” he said.
“Indeed, if euro zone inflation continues to pick up, ECB rate hikes might even be on the cards in late 2026,” he said.
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The Central Bank figures also show that Irish consumers had more than €160 billion in savings with Irish banks in September, a substantial portion of held in overnight deposit accounts which are attracting a meagre 0.13 per cent in interest on average.
Retail banks here have been criticised for failing to increase their deposit rates in line with ECB levels while reporting big annual profits.
