The likelihood of further reductions in interest rates may have prompted a decrease in the number of Irish home buyers selecting fixed-rate mortgage contracts. The Central Bank has reported a drop from 70% in April and 86% in May last year, to 66% of mortgage contracts this May. While in recent years there has been an upward trend for this type of mortgage, with just 10% of Irish homeowners choosing fixed-rate contracts in 2014, the current fall suggests impending rate cuts from the European Central Bank (ECB).
In June, the ECB decreased its headline rates by 0.25% as inflation in the euro area decreased, and it is forecasted to administer another cut this year. Statistics from The regulator reveal that newly negotiated mortgage rates in Ireland decreased by seven base points to 4.17% in May, resulting in the lowest mortgage rates in the previous nine months.
The average rate exceeded the euro area average by 37 basis points, ranking Ireland alongside the sixth highest rate in the unitary cash region. Interestingly, rates across the eurozone differed widely, ranging from 1.97% in Malta to 5.97% in Latvia.
Irish Mortgage Advisors (IMA) chairperson, Trevor Grant, stated that the reduction in the average mortgage interest rates could prove beneficial to prospective home buyers as it’s currently the lowest rate since August 2023. However, he warns potential purchasers that expected further cuts from the ECB may not necessarily result in significant reductions in Irish home-loan mortgage rates.