Information release 13 April 2012
The Retail Interest Rate Statistics 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. Although no distinction is made between Irish residents and residents of other euro area member states, Irish residents accounted for approximately 99 per cent of outstanding household loan and deposit activity and 88 per cent of outstanding NFC loan and 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. For the purpose of the retail interest rate statistics, new business is defined as any new agreement between the customer and the credit institution. This covers all financial contracts that specify, for the first time, the interest rate of the deposit or loan, as well as re-negotiations of existing deposits and loans.
View information release with charts and related data tables.
Loans to Households
- Interest rates on outstanding loans to households for house purchases reported by Irish resident credit institutions remained broadly unchanged in February 2012. The weighted average interest rate on outstanding mortgage loans with an original maturity over five years (which accounted for 99 per cent of outstanding mortgage loans) was 2.98 per cent at end-February 2012, unchanged from end-January, but 44 basis points lower than at end-September 2011.
- The corresponding rate reported by all credit institutions resident in the euro area was higher, at 3.86 per cent at end-February 2012, having fallen by just 6 basis points since end-September 2011. Developments in average outstanding mortgage interest rates in Ireland have broadly reflected the changes to the ECB main refinancing rate in recent years (Chart 1), due to the high proportion of ‘tracker’ and other variable rate mortgage products.
- Interest rates on all outstanding loans to households for consumption and other purposes fell marginally in February to a weighted average rate of 6.09 per cent, from 6.12 per cent at end-January. The interest rate on short-term loans for consumption and other purposes with an agreed maturity up to one year, which includes overdrafts and credit card debt, was 8.86 per cent at end-February 2012. The equivalent rate reported by all credit institutions in the euro area was lower, at 8.1 per cent. Meanwhile, the weighted average rate reported by Irish resident credit institutions on longer-term loans with an original maturity over five years was 4.24 per cent at end-February, compared to a rate of 5.28 per cent reported by all euro area credit institutions.
- With regard to new business, interest rates on new loans to households for house purchases fell marginally in February 2012. The weighted average interest rate on new loans for house purchases with either a floating rate or up to one year initial rate fixation was 3.09 per cent, compared to 3.11 per cent in January. Loans in this instrument category accounted for almost 90 per cent of new mortgage business in the last six months. In the euro area overall, loans with either a floating rate or up to one year initial rate fixation accounted for just over 30 per cent of new mortgage business over the last six months. The equivalent euro area interest rate on variable rate and up to one year fixed rate mortgages in February 2012 was 3.44 per cent.
- The weighted average interest rate on new loans to households for non-housing purposes increased in February 2012 to 7.73 per cent, from 6.73 per cent in January. New business volumes in this instrument category have been very low for the past year and, as a result, the interest rate series tends to be volatile.
Deposits from Households
- Interest rates on outstanding household term deposits continued to increase in February 2012. The weighted average interest rate on household deposits with agreed maturity up to two years was 3.6 per cent at end-February, compared to 3.57 per cent at end-January. Interest rates on deposits with agreed maturity over two years also increased, from 2.37 per cent at end-January to 2.43 per cent at end-February.
- Interest rates on household term deposits have increased significantly over the past year, reflecting efforts by Irish resident credit institutions to secure additional funding by offering attractive rates on longer-term deposit products. At end-December 2010, the weighted average interest rate reported by Irish resident credit institutions on all term deposits was 2.78 per cent, compared to an average rate of 2.46 per cent reported by all euro area credit institutions. Since then, Irish resident credit institutions have reported an increase of 68 basis points in this rate, to 3.46 per cent, while the current euro area rate is 2.79 per cent, reflecting a more moderate increase of 33 basis points.
- With regard to shorter-term deposits which are redeemable at notice, interest rates have declined in recent months, following moderate increases during the first ten months of 2011. At end-February 2012, the weighted average interest rate on deposits redeemable at notice was 2.08 per cent. This figure represents a decline of 35 basis points compared to the rate reported at end-October 2011. The most recent data on outstanding volumes suggest a compositional shift in household deposit holdings – moving out of short-term products which are redeemable at notice and into longer-term deposits with agreed maturity, reflecting the prevailing rates of interest for both instrument categories.
- In relation to new deposit business, interest rates on new household term deposits fell slightly in both January and February 2012, having increased over the course of 2011, as Irish resident credit institutions competed to attract new business. The weighted average interest rate on new household term deposits was 2.43 per cent in February 2012, compared to 1.97 per cent in February 2011.
Non-Financial Corporations (NFCs)
Loans to NFCs
- With regard to outstanding loans to NFCs issued by Irish resident credit institutions, interest rates continued to fall during February 2012. The weighted average interest rate on all outstanding NFC loans was 3.49 per cent at end-February. The equivalent rate at euro area level was 3.81 per cent.
- Longer-term loans to NFCs with an original maturity over five years accounted for 46 per cent of all outstanding loans issued to NFCs by Irish resident credit institutions at end-February 2012. The weighted average interest rate on these loans was 3.42 per cent, while the rates on short-term and medium-term loans were higher, at 3.56 per cent and 3.53 per cent, respectively.
- The weighted average interest rate on new loans to NFCs up to an amount of €1 million, which is often used as a proxy for the rate applying to loans to SMEs, was 4.95 per cent in February 2012 – an increase of 8 basis points compared to January, and 46 basis points higher than the rate reported in February 2011. The equivalent rate reported by euro area credit institutions for February 2012 was 4.3 per cent. For loans over €1 million, the rate reported by Irish resident credit institutions fell in February, to an average rate of 2.46 per cent. Given that volumes of new business are very low, month-on-month changes in rates are volatile, and can be unduly influenced by a very small number of new contracts. The equivalent euro area rate was 2.72 per cent.
Deposits from NFCs
- The weighted average interest rates on outstanding NFC term deposits fell slightly in February 2012, to 3.14 per cent from 3.15 per cent at end-January. The weighted average interest rate on NFC deposits with agreed maturity up to two years, which accounted for 96 per cent of NFC term deposits, was 3.21 per cent at end-February 2012, compared to 2.29 per cent at end-February 2011. The equivalent rate at euro area level at end-February 2012 was 2.08 per cent, having increased by 28 basis points over the past twelve months.
- With regard to new deposit business, the weighted average interest rate on new NFC term deposits was 1.89 per cent in February 2012 – an increase of 48 basis points from February 2011. Over the same period, the equivalent rate for the euro area fell by 7 basis points, to 1.3 per cent in February 2012.
 In recent months, new business volumes have been exceptionally low in a number of instrument categories. This can result in volatility in the interest rate series.
 Automatic renewals of existing contracts, which occur without any involvement by the customer, are not included in new business.
 For the purpose of these statistics, deposits redeemable at notice cover both the household and NFC sectors. At end-December 2011, households accounted for 88 per cent of outstanding deposits redeemable at notice.
 Short-term loans are those with an original maturity up to one year. Medium-term loans have an original maturity of between one and five years.