Dáil Éireann Debate, Thursday - 18 December 2025
182. Deputy Pa Daly asked the Tánaiste and Minister for Finance if he is aware Irish homeowners are paying some of the highest interest rates in the EU despite ECB rates being 2% since June 2025; and if he will make a statement on the matter. [72579/25]
Amharc ar fhreagraThe European Central Bank is responsible for monetary policy and the setting of official interest rates. Its main lending rate is currently 2.15%.
While changes in the level of official interest rates will feed through to the wider economy, it does not have a uniform impact on the level of retail interest rates. In a market economy the determination of retail and business lending rates is a commercial matter for individual creditors.
The most recent Central Bank data shows the weighted average interest rate on new mortgages was 3.56% in October. Although this is above the euro area average of 3.33%, it is almost half a percent lower than the same time last year.
While the weighted average new mortgage rate exceeded the euro average by 23 basis points in October of this year, it can be noted that this differential has narrowed over the course of the past twelve months from 51 basis points in October 2024.
The Government, in Budget 2026, maintained the mortgage interest tax credit at the current level for a further year and at a reduced level of relief for the subsequent year. This relief helps to offset the impact of the rising cost of living by providing Mortgage Interest Tax Relief for homeowners with an outstanding mortgage balance on their primary dwelling house of between €80,000 and €500,000 as of 31 December 2022. This Relief was extended in Budget 2025 and Budget 2026.
The Central Bank, through its regulatory framework, offers protection for consumers and requires that all regulated entities, including banks, retail credit firms and credit servicing firms, are transparent and fair in all their dealings with borrowers.
The revised and strengthened Consumer Protection Code will come into effect next March and will set out enhanced disclosure requirements on mortgage switching options and the impact of incentives on the overall cost of credit of a mortgage.
The banking industry has adopted an aligned industry-wide set of initial eligibility criteria to facilitate switching mortgages from a non-bank to a bank and it has introduced a website, called 'it's in your interest', to assist the mortgage switching process.
