Mortgage rates fall to 3.5% as ECB pause narrows gap with euro area
Central Bank data shows Irish rates still sixth highest in eurozone despite three-year low
11 February 2026 | 📧 editor@ipropertyradio.com
Irish mortgage rates fell to their lowest level in almost three years in December, as lenders responded to a prolonged pause in European Central Bank policy rates.
New figures from the Central Bank of Ireland show the weighted average interest rate on new mortgage agreements declined to 3.50% in December 2025, down three basis points from November and 30 basis points lower year-on-year Mortgage rates.
The equivalent euro area average stood at 3.32%, leaving Irish rates 18 basis points higher – the narrowest margin recorded since December 2023 Mortgage rates. Ireland ranked as the sixth-highest mortgage rate jurisdiction in the euro area for the third consecutive month.
Fixed rates dominate new lending
Fixed-rate products accounted for 92% of new mortgage agreements in December, up from 75% a year earlier Mortgage rates. The weighted average rate on new fixed mortgages was 3.44%, down 17 basis points annually.
By contrast, new variable-rate mortgages averaged 4.17% in December, nine basis points higher month-on-month, though 16 basis points lower than a year earlier Mortgage rates.
Total volumes of pure new mortgage agreements reached €1.4 billion in December, the highest monthly level of 2025 and 17% higher than December 2024 Mortgage rates. Renegotiated mortgages totalled €488 million in the month.
Fiona McMahon, Senior Mortgage Advisor with NFP Ireland, said the easing in average rates would be “welcome news to would-be house buyers”.
“While the ECB hinted a couple of months ago that its next move could be a hike, the risk of such an increase appears to have dissipated for the moment and this too will come as a relief to existing and prospective borrowers,” she said.
She cautioned, however, that if ECB rates remain on hold for the rest of the year, “this could put the brakes on any further falls in average Irish mortgage costs in the near future”.
Switching activity accelerates
McMahon pointed to increased competition among lenders, noting that switching drawdowns were at their second highest level since 2008, with the value of switching up 57.3% in 2025, according to Banking & Payments Federation Ireland data.
“Many borrowers, particularly those on standard variable rates, stand to save hundreds or even thousands per year by reviewing their current deal,” she said. “You may not even have to switch lender to get a better deal, particularly if your loan-to-value ratio has improved.”
Trevor Grant, Chairperson of Irish Mortgage Advisors, said the pause in ECB rates over the past eight months was likely to continue given subdued eurozone inflation.
“Would-be house buyers and existing mortgage holders need to be mindful that there could be a limit to the extent to which the cost of Irish mortgages will continue to fall into the future,” he said.
He added that competition, rather than ECB policy alone, was now exerting the greater influence on Irish mortgage pricing. “We have already seen competition at play this year leading to two of the main lenders in the market cutting rates in January. It is our view that more lenders will follow suit.”
Deposit rates remain subdued
On the savings side, returns remain modest. The average interest rate on household overnight deposits stood at 0.13% in December for the 13th consecutive month Mortgage rates.
New household term deposits averaged 1.86%, unchanged month-on-month but 59 basis points lower than a year earlier Mortgage rates. Ireland ranked ninth in the euro area for term deposit rates at year end.
The moderation in mortgage rates comes against a backdrop of record mortgage activity and rising house prices. BPFI data shows €14.5 billion in mortgage drawdowns in 2025, the highest annual level since 2008. Housing completions increased by 20% last year, according to the CSO.
Grant said larger average mortgage sizes heighten the impact of rate movements. “Ultimately, the larger your mortgage the larger your mortgage interest bill,” he said.
While Irish mortgage rates remain above the euro area average, December’s data suggests the pricing gap is narrowing. Whether that trend continues will depend on both ECB policy and the intensity of competition within the domestic lending market.
