New figures from the Central Bank show that the average interest rate on new Irish mortgages at the end of September was 3.59%, up a basis point from August and the first increase since January.
This compares to the euro area average of 3.34% and means that Ireland had the seventh highest rate in the euro area, one position higher than at the end of August.
The Central Bank noted that the average interest rate on new fixed rate mortgage agreements, which constitute 87% cent of the volume of new mortgage deals, was 3.51% in September, a basis point higher than the previous month and down 42 basis points from September last year.
Meanwhile, the weighted average interest rate on new variable rate mortgage deals was 4.08% in September, one basis points lower from August and 33 basis points lower in annual terms.
Today's Central Bank said the total volume of pure new mortgage agreements increased to €1.2 billion in September, 26% higher on an annual basis.
Commenting on today's Central Bank figures, Donal Magee, Senior Underwriter at Nua Money, said the increase in the average interest rate on new mortgages will be a worry to Irish mortgage holders.
"The ECB's recent decision to keep its rates on hold for the third time in a row was a further signal that mortgage borrowers have likely seen the last of ECB rate cuts for some time," Mr Magee said.
"While a more upbeat than expected European economy has prompted some to suggest that another ECB rate cut could be on the cards by next June, most economists see ECB rates remaining where they are," he added.
He said that competition across the mortgage market has been key to keeping downward pressure on rates in recent months and will continue to be vital in ensuring borrowers have access to fair value and real choice.
Mr Magee said a number of recent developments are likely to stimulate further competition in the market and lead to better mortgage deals for borrowers, including the moves by non-bank lenders to actively increase their mortgage activity.
"The ever-booming mortgage market should also help. Recent BPFI figures show that the number of first-time buyers drawing down mortgages is now at its highest level in almost 20 years," he said.
"In addition, re-mortgage/switching volumes and values increased by 35.0% and 57.9% year on year respectively. All lenders are keen to get as much of this growing pie as they can," he stated.
He said that while rising house prices are making it difficult for some to get on the property ladder, they could provide a silver lining for existing homeowners in that many now sit on significantly lower loan-to-value ratios than they did just a few years ago.
"That puts them in a powerful position to switch and get a better rate, or to release some equity in their home. Yet many still don’t realise this, or assume switching is too complicated - which isn't the case," he said.
