Mortgage Rates Plunge 0.5%—So Why Is Ireland Suddenly Trapped as the Eurozone’s 7th Most Expensive Market?

Ever wonder why mortgage rates in Ireland seem to be playing a bit of musical chairs with the eurozone rankings? Well, after dropping a notable 51 basis points over the past year to June, Ireland now finds itself perched as the seventh-highest in the eurozone—jumping up a notch from eighth just last month. It’s a curious dance, especially when the weighted average interest rate for new Irish mortgages landed at 3.6 percent in June—down from 4.11 percent a year prior, yet still sitting above the eurozone average of 3.29 percent. What’s really catching my eye is how the juggernaut of fixed-rate mortgages, covering 85 percent of new deals, nudged up slightly month-on-month but has slid significantly since last year. And with the European Central Bank’s recent pause on rate cuts, the mortgage landscape might just be on the cusp of another shift. Is the era of falling rates coming to a close, or will savvy borrowers find a way to navigate this evolving terrain? Let’s dive into the nitty-gritty and see what lessons we can draw for those who are watching every percentage point like a hawk this year. LEARN MORE

Mortgage rates in Ireland fell 51 basis points in the 12 months to June and the country is now the seventh-highest in the eurozone, up from eighth in May.

The latest figures from the Central Bank show the weighted average interest rate of new Irish mortgages was 3.6 per cent in June, down from 4.11 per cent during the same month last year and above the eurozone average of 3.29 per cent.

The average fixed rate, accounting for 85 per cent of new mortgage agreements, rose two basis points month-on-month to 3.52 per cent while falling 43 basis points year-on-year.

The ratio of fixed-rate to variable-rate mortgages has been increasing again month on month since the beginning of 2025, as ECB interest rates have decreased, the Central Bank said.

The average variable rate was down seven basis points from May and 40 basis points from June 2024 to 4.08 per cent.

In all, the volume of mortgage agreements increased €188m or 23 per cent on an annual basis to €996m for the month.

Renegotiated mortgages totalled €285m, a decline of €7m from May but up €144m from June 2024.

At the end of June 2025, fixed-rate mortgages constituted 64 per cent of renegotiated mortgages, and the weighted average interest rate on renegotiated fixed-rate mortgages was 3.47 per cent, down five basis points from the previous month and 43 basis points from the same month last year.

Trevor Grant, chair of Irish Mortgage Advisors, said lender capital requirements and a difficulty repossessing homes from borrowers who default on their mortgages were partly responsible for Ireland’s higher interest rates.

“Notwithstanding all this, there is still room for improvement and slowly competition is bringing rates down,” he continued.

“This all comes against the backdrop of the ECB’s decision to pause rate cuts last month. This significant shift in ECB policy could not only mark the end of its rate-cutting cycle, it could also herald that ECB rate hikes might be on the cards in late 2026, particularly if inflation starts to edge upwards in the EU again.

“So mortgage borrowers and would-be house buyers should be mindful that the pace of further mortgage rate cuts is likely to slow or even come to an end.”

Colin Rockett, senior mortgage advisor with NFP Ireland, said US tariffs could push up inflation and cause the ECB to raise rates once again.

“As we approach the autumn, getting the best possible deal on your mortgage is all the more important as this is the time of year that many households see their costs go up. Many families are under pressure with back-to-school costs,” said Rockett.

“Heating and electricity bills start to go up in the autumn as the colder and darker months start to kick in. Many households are already struggling with grocery price inflation, which jumped to almost five per cent in July, nearly three times the rate of overall inflation.”

(Pic: Getty Images)