Friday, August 08 12:42:22
While the rates Irish banks charge on new mortgages fell by four basis points to 3.15pc in June, they remain higher than most other eurozone countries, latest Central Bank figures show.
Interest rates on outstanding loans to households for house purchase declined to 2.74pc, falling 8 basis points since May but which was also higher than its equivalent euro area rate.
The corresponding end-June interest rate for the euro area was higher, at 3.29pc. Interest rates on outstanding mortgages in Ireland have tended to follow movements in the ECB’s main refinancing rate (MRO) more closely than equivalent euro area rates due to the higher proportion of tracker and other variable rate mortgage products in the domestic market (Chart 1). However, more recently, this traditional relationship is seen to have weakened.
The weighted average interest rate on new loans to households for non-housing purposes fell by just over 98 basis points over the month, to stand at 6.40 per cent. The corresponding euro area interest rate declined by 10 basis points at end-June, to stand at 4.69 per cent. The Central Bank said it should be noted that new business volumes for loans to households for non-housing purposes have been particularly low in recent years, resulting in a volatile series.
The weighted average interest rate on outstanding amounts of non-housing related loans was 7.11 per cent in June 2014, representing a 44 basis point increase over the month, and an 82 basis point rise since June 2013. This year-on-year increase was reflected across all three maturity categories of loans for consumption and other purposes, with loans in the medium-term category (fixation period of one to five years) exhibiting the most pronounced increase. The corresponding end-June rate for all non-housing loans in the euro area was 156 basis points lower than the Irish rate at 5.55 per cent.
For more visit: www.businessworld.ie