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Rates on new mortgages up in Feb

Friday, April 11 12:03:35

The interest rate on new loans to households for house purchase, with either a floating rate or short-term rate fixation, rose to 3.15pc at end-February 2014, according to new figures from the Central Bank.

This figure represents a 14 basis point increase from the end-January rate and partly reverses the month-on-month fall recorded in January.

Floating rate loans accounted for 84pc of all new mortgage business in the domestic market over the past year. In contrast, floating rate loans in the euro area accounted for a quarter of new mortgage business over the same period.

The weighted average interest rate on total outstanding household term deposits continued to decline to 2.09 per cent at end-February; this series has been in constant decline since May 2012.

Rates on outstanding loans for house purchase remained unchanged from the previous month, at 2.79 per cent.

The Central Bank reports that, over recent months, there has been evidence of movement in household deposits from medium-term categories towards the overnight category, highlighting the low deposit rates currently on offer across all maturities.

Meanwhile, the weighted average interest rate on new loans to households for non-housing purposes rose by 166 basis points over February, to stand at 7.91pc. This marks an 84 basis point rise since February 2013. This year-on-year increase was mainly driven by short-term loans for consumption and other purposes, which have an agreed maturity of up to 1 year. However, the bank notes that new business volumes for loans to households for non-housing purposes have been particularly low in recent years, resulting in a volatile interest rate series.

Interest rates on new household term deposits (which also includes existing deposit agreements renegotiated in February) remained relatively stable at end-February 2014 at 0.76pc, a year-on-year decrease of 50 basis points.

Non-Financial Corporations

The weighted average interest rate on new loan agreements to NFCs up to E1 million increased by 18 basis points over the month to 4.95pc. The corresponding interest rate charged by euro area credit institutions was 3.78pc.

In terms of new business NFC loans above E1 million, the weighted average interest rate increased by 33 basis points to 3.19 over the month. The bank says that new business volumes in these instrument categories are particularly low, resulting in pronounced month-on-month volatility.

Meanwhile, the weighted average interest rate on outstanding loans to NFCs issued by Irish-resident credit institutions increased by one basis point to 3.04pc. Interest rates in this category have remained relatively stable over the past year, showing a twelve-month average of 3.03pc. The equivalent euro area rate was 3.31pc.

The interest rate on new NFC term deposits increased by one basis point to 0.44pc, while the rate on outstanding NFC term deposits declined by one basis point to 1.42pc.