Interest Rates – Lenders Could Do Better In Passing On Interest Rate Cuts – Brokers Ireland

Press Release

Wednesday 9^th July 2025

Responding to today’s Central Bank Retail Interest Rates publication for May showing the weighted average interest rate on new mortgages at 3.66%, down six basis points in the month and 51 basis points year-on-year in May, Brokers Ireland said lenders could be doing more to pass on the benefit of interest rate cuts, or do so more quickly, and that is especially the case since they are not increasing the “appalling low interest rate of 0.13% on household overnight deposits where the vast majority of household savings are held, over €142 billion.”

Rachel McGovern, Brokers Ireland Deputy Chief Executive said while more competition is entering the mortgage market “we’re not yet seeing the benefit of that but may well do in the months ahead.”

She noted that an increasing number of new mortgage holders are opting for fixed rates which now constitute 84% of new mortgages, these rates have on average decreased by 0.53% from this time last year but it would be great to see some good value longer term fixed rates come onto the market.

“Clearly people are looking for security in an increasingly volatile world surrounded by cost of living increases at home. And we have to remember these mortgage holders are taking on much higher levels of debt with increasing property prices.”

She advised existing and new mortgage holders to consider their positions extremely carefully and take impartial advice, with sizeable savings to be achieved for many borrowers, depending on individual circumstances.

She said factors that can yield savings include an improved loan-to-value on your home, that is, the ratio of your loan to the value of your home.  With property prices increasing many existing mortgage holders will now have a better LTV, enabling them achieve a better interest rate, she said.

“It is advisable to review the situation on a yearly basis.”

An improved Building Energy Rating may also help a mortgage holder to achieve a green loan with a lower interest rate.

Ms McGovern said there are around seven thousand Irish mortgage holders paying excessive interest rates of 8.5% and above, according to research by the Oireachtas library. These are held by non-bank lenders.

“These borrowers are in an extremely difficult and unfair position, having been led to believe that when their mortgages were unwillingly transferred from the pillar banks to non-bank entities, they would enjoy the same terms. That has not turned out to be the case.”

She said they deserve special attention. A 2023 study by the London School of Economics suggested such solutions might include: interest-free equity loans to clear the unsecured element of these loans; Government equity loans and a Government guarantee for active lenders to offer affected borrowers new mortgages.

“The irony of this situation is these are the very people who can least afford such exorbitant interest rates. It is because they were struggling in the first place that their loans were transferred.

“And the absurdity of the situation is that the lenders got rescued but individual mortgage holders have not, at least not yet,” she said.

Ends

Note: Brokers Ireland operates the ‘Future Financial Experts’ Transition Year programme aimed at communicating good financial skills to students and creating awareness around financial concepts.

Further information:  Rachel McGovern, Deputy Chief Executive, Brokers Ireland          Tel.086-8259938

Mairéad Foley, Foley Ryan Communications                                                                            Tel. 086-2556764