Retail Interest Rates - August 2016

14 October 2016 Press Release

View information release with charts and related data tables.

Key Developments in Loans

  • The rate on all new floating rate loan agreements for house purchase[1]  (including renegotiations) was 3 per cent in August 2016, corresponding to a 12 basis point decline over the past twelve months. The equivalent euro area rate was 1.87 per cent (Chart 1).
  • Excluding renegotiations, new mortgage agreements amounted to €458 million in the month, bringing total new mortgage agreements, over the past twelve months, to €4.6 billion. The weighted average interest rate on new mortgage agreements, excluding renegotiations, declined 30 basis points over this period and stood at 3.47 per cent in August.
  • Variable rate mortgages accounted for approximately two-thirds of all new mortgage agreements in Ireland over the past year, for both principal dwelling houses (PDH) and buy-to-lets (BTL). This is significantly above the equivalent euro area share.
  • Renegotiated loans for house purchase totalled €386 million in August (Chart 2), with variable rate products accounting for the majority of renegotiations. The weighted average interest rate for renegotiated mortgages was 2.78 per cent in August.
  • Supplementary quarterly data shows that the most pronounced fall in PDH mortgage rates, over the year, was observed for standard variable rate mortgages, which fell by 53 basis points to 3.60 per cent at end-Q2 2016 (Chart 3). Fixed rate PDH mortgage rates also declined, with rates fixed for 1-3 years falling by 26 basis points over the same period. The share of fixed PDH mortgages increased over the year and accounted for just over 40 per cent of all new PDH mortgages in Q2 2016.
  • Both fixed and floating BTL mortgage rates declined over the year to end-Q2 2016 (Chart 4). BTL rates for all fixed categories declined by 25 basis points to 4.90 per cent over the period. Variable rates for BTLs also declined, falling by 22 basis points to 4.87 per cent over the year.

Key Developments in Deposits

  • Interest rates on household term deposits remained subdued in August 2016, at 0.14 per cent (Chart 5). This represented a 9 basis point decline over the year for depositors. While equivalent euro area rates had a slightly larger decline of 16 basis points over the same period, they remain somewhat higher at 0.54 per cent.
  • New business NFC term deposits fell by 8 basis point over the year to stand at 0.04 per cent in August. Corresponding NFC term deposits for the euro area fell by 9 basis point over the year, but recorded a slightly higher rate of 0.16 per cent during the same month (Chart 5).
  • The loan to deposit spread has fallen 32 basis points since the beginning of the year, and stands at 344 basis points in August (Chart 6). [2] The recent decline mainly relates to falling rates on household loans with a floating or up to one year initial fixation rate. 

Note 1:

Interest rates and new business volumes are collected from credit institutions with a significant level of lending or deposit business with households or non-financial corporations (NFCs). The sample is monitored to ensure compliance with ECB Regulation.

Monthly Retail Interest Rate Statistics in Tables B.1.1 to B.2.2 cover all euro-denominated lending to, and deposits from, households and NFCs in the euro area. New business is defined as any new agreement during the month between the customer and the credit institution. This agreement covers all financial contracts that specify the interest rate for the first time, including any renegotiation of existing business (excluding automatic renewals). These statistics are compiled under ECB Regulation and are comparable across the euro area.

Quarterly Retail Interest Rate Statistics in Table B.3.1 cover all euro and non-euro denominated mortgage lending in the Republic of Ireland only. New business refers to new mortgage lending drawdowns during the quarter, broken down by type of interest rate (i.e. fixed, tracker and SVR). These statistics are not compiled under ECB MFI interest rate Regulation.

Note 2:

There are a number of factors that can lead to differences between Retail Interest Rate statistics and interest rates advertised by resident credit institutions. These include renegotiated loans, the inclusion of home improvement loans, and the underlying statistical compilation methodology.

Note 3:

In January 2015, a number of enhancements to the calculation of the national weighted average interest rates and national total business volumes were introduced under ECB Guideline (ECB/2014/15). As a result of these enhancements, data have been recalculated for previous reference periods in order to ensure a consistent compilation of data across time.

Recent data are often provisional and may be subject to revision.

For further detail please see the Retail Interest Rates webpage for:

An extensive set of Retail Interest Rate Tables;

Retail Interest Rate Statistics Explanatory Note;

Previous Interest Rate Statistical Releases can be found here


[1] Floating rates include variable and up to 1 year initial rate fixation loans.

[2] The loan to deposit spread is the difference between new business term deposits and the weighted average rate on new business loans to households for either house purchase or consumer purposes, with a floating or up to one year initial fixation rate.