Mortgage rates in this country have fallen below 3pc for the first time in years.
But there is scope for much deeper cuts, mortgage experts said.
New figures show home buyers in this country with new mortgage agreements are still paying double the average rate in the rest of the eurozone despite the fall.
This is costing the typical new buyer €2,000 more a year than their European counterpart.
The average rate paid on a new mortgage in this country was 2.88pc in December, the Central Bank said.
This was down 13 basis points on the same month in the previous year.
However, the average rate being paid in the eurozone is half of the one in this country, at 1.37pc.
Ireland is the second most expensive country in the eurozone for mortgage rates after Greece.
There was a bigger fall in fixed-rate mortgage deals, with a drop of 12 basis points to 2.81 in December compared with the same month a year ago.
Mortgage experts said there was scope for lenders to cut their rates again.
Rates are coming down due to more competition between lenders, according to Joey Sheahan, head of credit at MyMortgages.ie and author of 'The Mortgage Coach'.
"But there is still a gulf between what our lenders are charging and what our European counterparts are offering their mortgage holders.
"We would hope that this gulf will continue to narrow over the coming years. We believe that there is scope for a cut of up to 0.25pc on some fixed-rate terms," he said.
Daragh Cassidy, of price comparison site Bonkers.ie, said the average first-time buyer mortgage is around €225,000. This means someone borrowing this amount over 30 years is paying almost €172 extra a month or more than €2,058 a year, compared to our European neighbours.
Banks blame higher levels of arrears and the difficulty repossessing properties, where the mortgage is not being paid, for the high lending rates.