Retail Interest Rates: September 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 weighted average interest rate on new mortgages agreed in Ireland stood at 2.78 per cent in September, down 5 basis points on the previous month (Table 1 & Chart 1). The average for the euro area stood at 1.34 per cent in September, although the rate varied considerably across countries. Ireland had the third highest mortgage interest rates across the euro area in September (Chart 2).
The weighted average interest rate on new fixed rate mortgage agreements declined by 2 basis points to 2.64 per cent in September 2020, a new series low.
For new variable rate mortgage agreements, the weighted average interest rates stood at 3.36 per cent in September, down 10 basis points on the previous month.
The volume of new mortgage agreements¹ amounted to €672 million in September 2020 (Chart 1), a decrease of 14 per cent on September 2019. However, this represented an increase of 44 per cent when compared with the previous month.
€540 million was agreed in new fixed rate mortgages, and €132 million in variable rate mortgages in September.
Fixed rate mortgages (including renegotiations)accounted for 78 per cent of all new agreements in the three months to September. This compares with 84 per cent of new agreements for the same period in the euro area.
Renegotiated mortgages amounted to €352 million in September, up 56 per cent on the previous month (Chart 3). The weighted average interest rate for all renegotiated mortgages was 2.82 per cent in September 2020.
New consumer lending agreements (including renegotiations) stood at €168 million in September 2020, a decrease of 13 per cent on the previous year (Chart 4).
The average interest rate on consumer loans was 7.54 per cent in September; the equivalent euro area rate stood at 5.23 per cent.
Total NFC loan agreements were €1,312 million in September, a fall of 6 per cent in annual terms (Chart 5).
Interest rates on new NFC loans of up to €250k recorded a weighted average interest rate of 4.95 per cent in September, the equivalent euro area rate stood at 1.98 per cent. €145 million was agreed with Irish banks in September, €11 million (or 9 per cent) higher than in September 2019 (Chart 5).
For new NFC loans of over €250k and up to €1 million, the volume of new lending amounted to €74 million in September. The weighted average interest rate stood at 2.92 per cent in September, the equivalent euro area rate was 1.51 per cent.
For new NFC loans of over €1 million, which represent 83 per cent of new NFC loans, the volume of new lending amounted to €1,093 million in September, a decrease of 3 per cent on September 2019. The weighted average interest rate stood at 2.59 per cent in September, compared to 1.25 per cent in the euro area.
NFC overdrafts were 3 per cent lower in year-on-year terms in September.² This is the first substantive decline since the beginning of the Covid-19 pandemic in March.

Key Developments in Deposits

Interest rates on new household term deposits remained at 0.02 per cent in September. The equivalent euro area rate was 0.23 per cent.
Interest rates on new business NFC term deposits in Ireland stood at -0.12 per cent in September, up 4 basis points on the previous month. Corresponding NFC term deposit rates for the euro area stood at -0.18 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: