Central Bank of Ireland – Retail Interest Rate Statistics: November 2012

14-1-2013 — /europawire.eu/ — The Retail Interest Rate Statistics^[1] cover lending to, and deposits from, households and non-financial corporations (NFCs) in the euro area by credit institutions resident in Ireland. Interest rates and business volumes refer to euro-denominated loans and deposits only. Irish residents accounted for approximately 99 per cent of outstanding household loan & deposit activity and 88 per cent of outstanding NFC loan & deposit activity at end-December 2011.

Interest rates on outstanding amounts cover all loans and deposits outstanding on the last working day of the month. Interest rates on new business volumes cover all new loan and deposit business agreed during the month[2]. For retail interest rate statistics purposes, new business is defined as any new agreement between the customer and the credit institution.[3]

View information release with charts and related data tables.

Households

Loans to Households

• Interest rates on outstanding loans to households for house purchase were 2.99 per cent at end-November 2012, representing a fall of eight basis points since the beginning of the year. The corresponding interest rate reported by all credit institutions resident in the euro area declined to 3.59 per cent at end-November 2012, representing a two basis point decline since end-October and a decline of 30 basis points since the beginning of the year.
• The weighted average interest rate on outstanding mortgage loans with an original maturity of over five years (which accounted for 99 per cent of outstanding mortgage loans) stood at 2.99 per cent at end-November 2012, representing a fall of only seven basis points since the beginning of the year. The corresponding interest rate for the euro area stood at 3.60 per cent at end-November 2012, having fallen by some 29 basis points since the beginning of the year.
• In comparison to the euro area, the average interest rates on outstanding mortgages in Ireland have more closely reflected movements in the ECB’s main refinancing rate (MRO) over the last number of years (Chart 1). This relationship is principally derived from the higher proportion of “tracker” and variable rate mortgage products in the domestic market. However, over the last three months there has been a 15 basis point increase from 2.84 per cent to 2.99 per cent in the Irish rates. Over the same period the corresponding main refinancing rate has remained unchanged.
• Interest rates on outstanding loans to households for consumption and other purposes increased by three basis points at end-November 2012, to stand at 5.64 per cent. This represented a fall of 66 basis points since the beginning of the year. The interest rate on short-term loans for consumption and other purposes with an agreed maturity up to one year[4] remained broadly unchanged at end-November 2012. The corresponding short-term rate reported by all credit institutions in the euro area was significantly lower at 7.60 per cent at end-November 2012. In terms of longer-term loans, the weighted average interest rate reported by Irish resident credit institutions on loans with an original maturity over five years was 3.99 per cent at end-November, falling by 42 basis points since the beginning of the year. In the euro area, the equivalent long-term interest rate reported by all credit institutions stood at 4.97 per cent at end-November 2012.
• In relation to new business, the weighted average interest rate on loans for house purchase with either a floating rate or initial rate fixation of up to one year was 3.35 per cent at end-November 2012, rising by 12 basis points compared with the previous month. In the euro area, the corresponding interest rate on loans for house purchase with either a floating rate or an initial fixation period of up to one year was 2.87 per cent at end-November. In the domestic market, loans in this instrument category accounted for 78 per cent of new mortgage business at end-November 2012. In contrast, loans in the same instrument category accounted for just 31 per cent of new mortgage business in the euro area.
• The weighted average interest rate on new loan agreements to households for non-housing purposes decreased from 7.06 per cent in October 2012 to 5.88 at end-November 2012. New business volumes in this instrument category have been quite low, averaging approximately €200 million per month over the year ending November 2012. As a result, the corresponding interest rate series has been volatile.

Deposits from Households

• Interest rates on total outstanding household term deposits declined from 3.29 per cent at end-October 2012 to stand at 3.24 per cent at end-November 2012. The weighted average interest rate on household deposits with an agreed maturity of up to two years decreased by six basis points to 3.35 per cent at end-November 2012. In terms of longer-term interest rates, deposits with an agreed maturity over two years have remained broadly unchanged over the last number of months, falling by just six basis points to 2.42 per cent at end-November 2012.
• Interest rates applicable to household term deposits increased significantly during 2011 and the first half of 2012, peaking in April 2012 at 3.53 per cent. However, during more recent months this trend has been reversed. Total term deposit rates reported by Irish resident credit institutions declined for the seventh consecutive month to stand at 3.24 per cent at end-November 2012.
• In relation to shorter-term deposits, which are redeemable at notice, interest rates have continued to decline over the last number of months[5]. However, rates remained unchanged at end-November 2012, standing at 1.51 per cent, representing a decline of 82 basis points since the beginning of the year. Deposit volumes suggest that, to some extent, households are moving out of short-term products, which are redeemable at notice, and into longer-term deposits with agreed maturity.
• In terms of new deposit business, interest rates on household term deposits declined to 1.28 per cent at end-November 2012, compared with 1.35 per cent at end-October 2012.

Non-Financial Corporations (NFCs)

Loans to NFCs

• Interest rates on outstanding loans to NFCs issued by Irish resident credit institutions declined for the thirteenth consecutive month at end-November 2012. The weighted average interest rate on all outstanding NFC loans was 2.96 per cent at end-November, compared with 2.98 per cent at end-October 2012. The equivalent euro area weighted average interest rate was 3.37 per cent at end-November 2012.
• Loans with an original maturity of over five years accounted for 48 per cent of all outstanding loans issued to NFCs by Irish resident credit institutions as of end-November 2012. The weighted average interest rate on these longer-term loans was 2.97 per cent, representing a minimal increase of just one basis point over the month. Interest rates applicable to both short- and medium-term loans[6] were 3.16 per cent and 2.73 per cent respectively at end-November, both showing slight decreases from the previous month of three and six basis points respectively.
• The weighted average interest rate on new loan agreements to NFCs up to €1 million[7] stood at 4.84 per cent at end-November 2012, representing an increase of 62 basis points compared with October 2012, bringing current rates above the twelve-month average of 4.64 per cent. The corresponding interest rate reported by all euro area credit institutions in November was substantially lower at 3.88 per cent. Increased month-on-month volatility in this interest rate series is principally derived from particularly low volumes in the respective instrument categories, as relatively few contracts can cause sizable movements within the overall series.
• In terms of new business NFC loans above €1 million, Irish resident credit institutions reported an increase of 18 basis points at end-November 2012, bringing the average rate to 2.78 per cent. This represents the first increase in this rate in six months. The equivalent euro zone interest rate decreased slightly, by two basis points, over the same period to stand at 2.26 per cent.

Deposits from NFCs

• The weighted average interest rate on outstanding NFC term deposits remained unchanged at 2.53 per cent, compared with the twelve-month average of 2.91 per cent. Deposits with agreed maturity up to two years, which accounted for 96 per cent of NFC term deposits, remained unchanged at 2.57 per cent at end-November 2012. The equivalent rate at euro area level was 1.79 per cent at end-November.
• In relation to new deposit business, the weighted average interest rate on new NFC term deposits was 0.83 per cent at end-November 2012, representing a decrease of 25 basis points since October 2012. During the same period, the equivalent weighted average euro area interest rate decreased marginally by two basis points to 1.09 per cent.