The average cost of interest on new mortgages was 3.29% in Ireland – 66 basis points higher than the euro area average of 2.63%.
Most interest rates charged by Irish banks have increased over the past year, despite cuts to the European Central Bank’s key rates.
Figures out today from the Central Bank show that the average interest rate charged on personal overdrafts has gone up from 13.44% to 14.3% in the year to July.
During the same period, consumer loans of one to five years duration increased sharply – from 5.95% to 8.01%.
The cost of loans to businesses increased from 2.81% to 3.29% in this period (for loans of one to five years duration). But the cost of corporate overdrafts fell by 20 basis points, from 4.7% to 4.5%.
The weighted average interest rate on outstanding mortgages also fell by the same amount, from 2.93% to 2.73% in the year to July.
According to the Central Bank, this is just over half a percentage point cheaper than the equivalent rate for the euro zone as a whole, which is 3.26%.
However, the Irish figure is distorted by the very high number of tracker mortgages in Ireland, which charge a low fixed margin above the ECB main refinancing rate (refi), which can be as little as 50 basis points.
With the cut in interest rates announced last week, which brought the refi rate down to 0.05%, some tracker mortgages carry an interest rate as low as 0.55%.
With the banks here no longer issuing trackers, a better guide to the cost of borrowing in Ireland comes from the Central Bank’s figures on the cost of new loans for house purchase.
These showed a 14 basis point increase between June and July, following the ten basis point cut on tracker interest charges in the same period – that followed the ECB’s ten basis point cut in the refi rate in June.
The average cost of interest on new mortgages was 3.29% in Ireland – 66 basis points higher than the Euro area average of 2.63%.
For consumer loans, the weighted average interest rate on new loans to households for non-housing purposes increased by 114 basis points between June and July, to stand at 7.54%.
The corresponding euro area interest rate declined by 13 basis points at the end of July to stand at 4.56%.
The Central Bank says new business volumes for loans to households for non-housing purposes have been particularly low in recent years, resulting in pronounced volatility in the series.
The volume of outstanding loans to household and non-financial corporate borrowers is down across all the categories measured by the Central Bank over the past twelve months.
Ireland’s two main banks, Bank of Ireland and AIB, said they had returned to profitability in their interim accounts for the first half of this year, on the back of higher net interest margins.