Irish banks are continuing to offer customers some of the most expensive variable mortgage rates in the world, charging nearly twice the euro-area average.

Central Bank figures show the average interest rate applied to new variable rate mortgages in September was 3.37 per cent compared to a euro-area average of just 1.83 per cent.

Mortgage interest rates in the Republic used to more closely reflect the main European Central Bank (ECB) lending rates .

Since the crash, however, Irish banks have failed to pass on lower interest rates to variable rate customers here, effectively attaching a premium to compensate for loss-making tracker mortgages.

In the past six weeks, AIB and Haven have cut their standard variable rates, and EBS and Bank of Ireland have cut a number of their fixed mortgage rates.

Mark Whelan of Bonkers.ie said: “The ongoing mortgage rate war is good news for Irish borrowers, who have seen their mortgage options greatly improve over the last few weeks.

“The fact that AIB, Haven, EBS, Bank of Ireland and now Ulster Bank have all cut rates in quick succession indicates that the Irish mortgage market is becoming increasingly competitive,” he said.

“However, it is not before time. Irish mortgage holders have been paying much more than their fellow Europeans for years and, unfortunately, this looks set to remain the case,” he added.

The Central Bank figures show average new variable buy-to-let (BTL) mortgage rates stood at 4.73 per cent in the third quarter of this, unchanged from the same period last year.

Fixed-rate BTL mortgages, meanwhile, increased by 1 basis point to 4.85 per cent over the same period. The majority of BTL lending is at variable rates - these accounted for 90 per cent of new draw-downs in the third quarter, the bank said.

Fixed-rate loans Overall, the share of fixed-rate mortgages continues to increase, accounting for 53 per cent of new agreements over the past three months. The share of euro area fixed-rate mortgages over the past three months remains higher at 81 per cent

The figures also show the value of new mortgage agreements amounted to €632 million in September, bringing new agreements to €6.1 billion over the previous 12 months.