New figures from the Central Bank show that Ireland had the second highest mortgage rates in the euro area in January, coming just after Greece.
The Central Bank said the average interest rate on new Irish mortgages was 2.76% in January, up from 2.69% in December but down three basis points on the same time last year.
The average for the euro area stood at 1.31% in January, up from 1.29% in December. The Central Bank noted that the rate varied considerably across countries.
Finland once again has the lowest average mortgage rate in the euro zone at just 0.79%, closely followed by Portugal at 0.80%.
Today's Central Bank figures show that the weighted average interest rate on new fixed rate mortgage agreements, which account for 81% of all new home loans, was 2.59% in January. This equates to a decrease of six basis points on January 2021 and was unchanged from the previous month.
The Central Bank noted that new variable rate mortgage agreements continue to decline as households increasingly use fixed rate products.
Meanwhile, the volume of new mortgage agreements came to a total of €530m in January 2022. The Central Bank said the decline from the previous month is in-line with seasonal trends, while it also represented an increase of 6% on January 2021.
Renegotiated mortgages amounted to €321m in January and the Central Bank said the average interest rate for all renegotiated mortgages was 2.61%.
Commenting on today's figures, Daragh Cassidy, Head of Communications at bonkers.ie, said that January marked the first time in almost five years that the average rate in Ireland has increased so much over the space of a month.
Mr Cassidy said that rapidly rising inflation has led to talk of an increase in interest rates by the ECB over the coming months to help tame it.
"Mortgage rates have been falling slowly but steadily in Ireland over the past several years. And they continue to fall - for now at least," he said.
"Today's news that the average rate has increased suggests more first-time buyers might be opting for longer-term, more expensive fixed rates than previously. This would be unsurprising as there has been talk in recent months of the ECB starting to increase rates," he added.
BPFI figures from December show that the average first-time buyer mortgage in Ireland is around €262,000. This means someone borrowing this amount over 30 years is paying almost €187 extra a month, or over €2,200 a year, compared to our European neighbours.
"Higher mortgage rates add hugely to the cost of living in Ireland, which as we know is already extremely high compared to the rest of Europe. According to Eurostat, Irish housing costs such as rent, mortgage rates, gas and electricity are a staggering 78% above the European average," Daragh Cassidy said.
"However, for those who are concerned about rising inflation and housing costs, switching your mortgage is a really effective way to put money back into your pocket," he advised.
"For example, a homeowner who is paying an interest rate of 4% and who has €250,000 and 20 years remaining on their mortgage, could save over €225 a month by switching to a 2.20% fixed rate, which is now widely available," he added.