Irish mortgage interest rates below euro area average

Interest rates on outstanding mortgages stood at 2.88 per cent at the end of May, according to figures published by the Central Bank yesterday.

The rate was a broadly stable over the past year, with a 12-month average of 2.95 per cent.

The corresponding interest rate reported by all credit institutions resident in the euro area was 3.45 per cent. According to the Central Bank, the reason Irish retail mortgage rates are lower than the euro area average is because of the “higher proportion of tracker and variable rate mortgage products in the domestic market’ compared to the euro area norm.

Tracker and variable mortgage interest payments are linked to the base rate set by the European Central Bank. The base rate remains at historic lows.

However, the rates new Irish mortgage holders are being charged is now above the euro area norm. The interest rate on new loans for house purchases with either a floating rate or initial rate fixation of up to one year, was 3.19 per cent at the end of May, decreasing by 4 basis points compared with April 2013. The equivalent rate in the euro area was 2.87 per cent. In the domestic market, loans in this category account for 75 per cent of new mortgage business at the end of May.

Interest rates on household term deposits declined from 2.85 per cent at the end of April, to 2.72 per cent at the end of May. The rate on household deposits with an agreed maturity of up to two years decreased by 14 basis points over the month, to 2.78 per cent. Longer term interest rates on deposits with an agreed maturity over two years declined by four basis points to 2.32 per cent at the end of May.

In terms of new deposit business, interest rates on household term deposits stood at 0.94 per cent at the end of May, compared to 1.12 per cent at the end of April.

The weighted average interest rate on all outstanding loans to non financial businesses was 3.04 per cent at the end of May, the same figures show.

The equivalent euro area weighted average interest rate for businesses was 3.28 per cent.