Retail Interest Rates: July 2020

Editorial Team

This post was published by the Irish Business Focus editorial team

View information release with charts and related data tables

Key Developments in Loans

The volume of new mortgage agreements¹ amounted to €556 million in July 2020 (Chart 1), a decrease of 35 per cent on July 2019. However, an increase of 13 per cent was recorded when compared with the previous month, the second consecutive monthly increase since March.
€445 million was agreed in new fixed rate mortgages, a decrease of 31 per cent on July the previous year. New variable rate mortgage agreements declined by 46 per cent year-on-year, to €111 million in July (Table 1).
Fixed rate mortgages (including renegotiations)accounted for 76 per cent of all new agreements in the three months to July. This compares with 84 per cent of new agreements for the same period in the euro area.
The weighted average interest rate on new mortgages agreed in Ireland stood at 2.82 per cent in July, up 3 basis points on the previous month (Table 1 and Chart 1). The average for the euro area stood at 1.35 per cent in July, although the rate varied considerably across countries. Ireland had the third highest mortgage interest rate across the euro area in July (Chart 2).
The weighted average interest rate on new fixed rate mortgage agreements declined by 1 basis point over the month to 2.67 per cent in July, a new series low.
New variable rate mortgage weighted average interest rates stood at 3.44 per cent in July, up 24 basis points on the previous month. With lower volumes of agreed variable rate mortgages, the interest rate series can be volatile as rates are weighted by volumes.
Renegotiated mortgages amounted to €251 million in July, up 6 per cent on the previous month (Chart 3). Fixed rate products accounted for 71 per cent of renegotiations. The weighted average interest rate for all renegotiated mortgages was 2.81 per cent in July 2020.
New consumer lending agreements (including renegotiations) stood at €221 million in July 2020, an increase of 59 per cent on the previous month, although lending continues to remain lower in year-on-year terms (Chart 4). The average interest rate was 7.08 per cent in July, the equivalent euro area rate stood at 5.22 per cent.
After two consecutive months of sharp annual declines across new NFC lending categories, total NFC lending stabilised in July. New lending stood at €1,319 million, largely unchanged on July the previous year (Chart 5).
Interest rates on new NFC loans of up to €250k, which typically include SME loans, recorded a weighted average interest rate of 4.95 per cent in July, while the equivalent euro area rate stood at 1.91 per cent. The volume of new lending in Ireland stood at €153 million in July, €4 million (or 3 per cent) lower than in July 2019 (Chart 5).
For new NFC loans over €250k and up to €1 million, the volume of new lending amounted to €145 million in July, €3 million (or 2 per cent) higher than in July 2019. The weighted average interest rate stood at 3.17 per cent in July, the equivalent euro area rate was 1.51 per cent.
For new NFC loans over €1 million, which represents 77 per cent of total new NFC loans, the volume of new lending amounted to €1,021 million in July, marginally lower than in July 2019. The weighted average interest rate stood at 2.20 per cent in July, compared to 1.25 per cent in the euro area.

Key Developments in Deposits

Interest rates on new household term deposits remained at 0.02 per cent in July. The equivalent euro area rate was 0.26 per cent.
Interest rates on new business NFC term deposits in Ireland stood at -0.13 per cent in July, down 6 basis points on the month. Corresponding NFC term deposit rates for the euro area stood at -0.16 per cent.

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: