Banks in Ireland have been called on to cut variable mortgage rates after it emerged Ireland has higher home-loan lending rates than the Eurozone average.

Ciaran Phelan, head of the Irish Brokers Association, said lenders should not abuse the situation where there is little competition in the banking market. He said banks should reduce mortgage rates for first-time buyers and for existing mortgage holders on high variable rates.

Around 200,000 existing mortgage holders in Ireland are on variable rates averaging 4.50%. Phelan told the Irish Independent: “The ECB main rate has never been lower. So why then have new figures from the Central Bank revealed that the interest rates on new loan agreements to households for house purchase are some 0.51% higher than the equivalent euro area rate?”

He said there were thousands of potential new buyers waiting to enter the market. “Our message is quite simple – we want the banks to reduce their rates to promote a fairer and more competitive market for those looking for new mortgages. Lower rates mean more affordable repayments and greater spending power in the rest of the economy.”