Retail Interest Rate Statistics - May 2016

View information release with charts and related data tables. 

Key Developments

• The rate on all new floating rate loan agreements for house purchase 1 (including renegotiations) was 3.12 per cent at end-May 2016, corresponding to a 10 basis point decline over the past twelve months.  The equivalent euro rate was 1.84 per cent (Chart 1).
• Excluding renegotiations, new mortgage agreements amounted to €369 million in the month, bringing total new mortgage agreements, over the past twelve months, to €4.5 billion. The weighted average interest rate on pure new mortgage agreements, once renegotiations are excluded, declined 34 basis points over this period and stood at 3.52 per cent in May.
• Variable rate mortgages accounted for just over 60 per cent of all new mortgage agreements in Ireland over the past year.  This is significantly above the equivalent euro-area share.
• Renegotiated loans for house purchase totalled €359 million in May 2016 (Chart 2), with variable rate products accounting for the majority of renegotiated contracts.  The weighted average interest rate for renegotiated mortgages was 3.01 in May.
• Supplementary quarterly data, however, allows us to examiner variation within the variable rate category and across PDH and BTL properties.
• The most pronounced fall in principal dwelling house (PDH) mortgage rates was observed for standard variable rate mortgages, which fell by 49 basis points to 3.64 per cent over the year to end Q1-2-016 (Chart 3).  Fixed rate PDH mortgage rates also declined, with rates fixed for 1-3 years falling by 34 basis points over the same period.  The share of fixed PDH mortgages increased over the year and accounted for 50 per cent of all PDH mortgages in Q1 2016.

Notes:

A number of enhancements to the calculation of the national weighted average interest rates and national total business volumes have been introduced in ECB Guideline (ECB/2014/15) on monetary and financial statistics. These enhancements introduced in the Guideline involve changes to the sampling methods. The changes made contribute to a further harmonization of the data compilation process thus improving cross-country data comparison. The changes apply as of January 2015 for reference period December 2014. As a result of these enhancements, data have been recalculated, as per the requirements of Guideline ECB/2014/15, for previous reference periods in order to ensure a consistent and coherent compilation of data across time and to allow for time series analysis. The extensive set of Retail Interest Rate Statistics tables are available on the Central Bank of Ireland website.

Retail Interest Rate Statistics cover all euro-denominated lending to, and deposits from, households and non-financial corporations (NFCs) in the euro area by credit institutions resident in Ireland. Interest rates on outstanding amounts cover all loans and deposits outstanding on the last working day of the month, while interest rates applicable to new business volumes cover all new loan and deposit business agreed during the month.

For retail interest rate statistics purposes, new business is defined as any new agreement between the customer and the credit institution. This agreement covers all financial contracts that specify, for the first time, the interest rate of the deposit or loan, including any renegotiation of existing deposits and loans. Automatic renewals of existing contracts, which occur without any involvement by the customer, are not included in new business. New business volumes have been exceptionally low in various instrument categories during the last number of months. Low volumes of this nature can result in increased volatility within the interest rate series.

New loan agreements to households for house purchase with either a floating or initial rate fixation period of up to one year are broader in scope than just ‘new mortgages’, issued at variable interest rates. There are a number of factors that can lead to differences between MIR statistics and interest rates advertised by resident credit institutions, including renegotiated loans, the inclusion of home improvement loans, and the underlying MIR compilation methodology. New data on mortgage interest rates are available, and outlined above, these rates are not part of the MIR framework and represent drawdowns broken down by type of interest rate (i.e. Fixed, Tracker and SVR). These data will be available on a quarterly basis.