It is not yet clear how the property market will respond to the economic fallout from Covid-19, but a picture of sorts is emerging.

Figures from the CSO earlier in the week suggested that property price inflation had pretty much stalled nationally in the year to June with prices in the capital down 0.7%.

The volume of transactions in June dropped by a third compared with the same month last year.

It will take several months for a full picture to emerge but, so far, the anticipated 10 to 12% pullback in prices doesn't appear to be materialising.

The latest data on mortgage lending, meanwhile, points to a market that's holding up relatively well, but with signs of weakness still apparent.

According to the latest figures from the Banking and Payments Federation, mortgage drawdowns amounted to €1.5 billion between April and the end of June, down 35% on the year.

However, mortgage approvals in June remained weak at €536 million - down 48% on the year.

Nonetheless, lenders appear to be aggressively targeting potential borrowers, with signs of intensified competition in the market.

And this despite the move by many to grant payment breaks to thousands of mortgage holders adversely impacted by the economic effects of the pandemic.

What's more, the banks recently set aside massive amounts of money to cover the cost of potential bad loans down the tracks.

All in all, it looks to be an odd time to be targeting new lending.

Why are the banks so keen to get new mortgage customers right now?

Much of it appears to have been inspired by the promised entry of a new player to the mortgage market.

Avantcard - which already has a presence here in the credit card and personal loans market - has said it intends to start selling mortgages in the Irish market in the coming months under the brand, Avant Money.

It's owned by the Spanish lender, Bankinter, which already has a substantial mortgage business, primarily in Spain and Portugal.

Avant Money says it plans to offer fixed rates under 2% to new customers here from the Autumn. The products will be offered through the broker network.

"That massively undercuts the opposition and provides much needed competition in the sector," Rob Flynn of the price comparison website, bonkers.ie said.

He pointed to the fact that Irish consumers are paying an average rate of 2.87% on new mortgages.

And while they have come down slightly in recent years, rates here are still nearly double the average for the euro zone.

How have the banks reacted?

The established lenders in the market were quick to respond, with Permanent TSB the first out of the traps with a cut to its mortgage rates.

It said it was cutting its standard variable rate by 0.55% and it was reducing its fixed rate products to as low as 2.95%.

Ulster Bank and KBC responded with cashback offers of up to €1,500.

They're the latest to bring such products to the market with Bank of Ireland, Permanent TSB and EBS all offering cashback deals of 2% (of the value of the mortgage) or more.

"Not all the lenders in Ireland will be able to compete with Avant Money on rate alone and will have to differentiate themselves in other ways," Daragh Cassidy, Head of Communications with bonkers.ie said.

"There's still a lot of debate over the merits of cashback deals with many experts complaining that they have led to higher interest rates for mortgage holders here."

However, he pointed out that such products had become extremely popular in Ireland and seem set to remain a part of the mortgage landscape for the immediate future.

And, quite simply, they suit some buyers.

"It's wonderful to finally secure your dream home with a mortgage but it's not much good if you can't afford to furnish it," Mr Cassidy said.

Karl Deeter, founder of OnlineApplication.ie, warned that, when it comes to cashbacks, buyer beware.

"Cashbacks are attractive because people like money," he said.

"The best way to present credit is about the cost of ownership. People usually end up paying a slightly higher rate for the cash injections. So, you ultimately end up paying for it," he explained.

He pointed out that the savings on a reduced interest rate loan, without the inducement of a cashback offer, could amount to tens of thousands of euro over the lifetime of a loan.

Mr Deeter said, given the power, he would ban cashback offers.

"If you believe you get free lunches from the bank, you will be a hungry person and a very disillusioned one," he stated.

Are mortgage interest rates likely to fall further now?

The banks will undoubtedly come under pressure in the months ahead to further cut mortgage interest rates, putting even more strain on their margins.

They're feeling the heat on all sides right now with lending rates falling and deposit rates moving into negative territory, which means it generally costs the banks to manage customer deposits where in the past they would have made money on those cash piles.

So far, the banks have been reluctant to pass those costs onto household savers in the form of negative deposit rates.

Most have started charging large corporate customers and pension funds for deposits and, in some cases, larger SMEs.

However, banks' argument that they carry a high proportion of legacy bad loans from the last downturn, and that this has to be reflected in the cost of credit, is starting to ring hollow given that many of them have offloaded a large proportion of such loans through loan book sales.

This would suggest that they have scope to cut rates further, but they'll likely seek to make the money back in other ways, such as an extension of deposit charges to a larger customer cohort or additional charges for transactions and account management fees.

"The fact that another lender has come into the market, and the fact that other banks have been responding before it's lent a single euro here, is proof that we're getting back to being a viable market place," Karl Deeter said.

So, are we on the cusp of a mortgage war? It certainly looks like the first shots have been fired.