business

Existing Home Loan Rates Up Slightly

Interest rates on outstanding loans to households for house purchases reported by Irish resident credit institutions increased slightly in April 2012, according to figures released today by the Central Bank.

The weighted average interest rate on outstanding mortgage loans with an original maturity over five years (which accounted for 99 per cent of outstanding mortgage loans) was 3.00 per cent at end-April 2012. This was 2 basis points higher than at end-March 2012, but 42 basis points lower than at end-September 2011.

The corresponding rate reported by all credit institutions resident in the euro area was higher, at 3.80 per cent at end-April 2012, having fallen by just 11 basis points since end-September 2011. Developments in average outstanding mortgage interest rates in Ireland have broadly reflected the changes to the ECB main refinancing rate in recent years due to the high proportion of 'tracker' and other variable rate mortgage products.

Interest rates on outstanding loans to households for consumption and other purposes fell again in April, to a weighted average rate of 5.87 per cent, from 5.96 per cent at end-March. The interest rate on short-term loans for consumption and other purposes with an agreed maturity up to one year, which includes both overdrafts and credit card debt, fell by 9 basis points during the month to 8.64 per cent at end-April. The equivalent rate reported by all credit institutions in the euro area was lower, at 7.97 per cent.

Meanwhile, the weighted average rate reported by Irish resident credit institutions on longer-term loans with an original maturity over five years was 4.17 per cent at end-April, compared to a rate of 5.20 per cent reported by all euro area credit institutions. With regard to new business, interest rates on new loans to households for house purchases fell in April 2012. The weighted average interest rate on new loans for house purchases with either a floating rate or up to one year initial rate fixation was 3.05 per cent, compared to 3.13 per cent in March.

Loans in this category accounted for over 90 per cent of new mortgage business in the last six months. In the euro area overall, loans with either a floating rate or up to one year initial rate fixation accounted for just 30 per cent of new mortgage business over the last six months. The equivalent euro area interest rate on variable rate and up to one year fixed rate mortgages in April 2012 was 3.20 per cent.