CB figures - New business variable rate is still 4.13% - 2.02% in Eurozone

Brendan Burgess

Brendan Burgess

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  • Variable rate new housing loans (excluding renegotiations) averaged 4.13 per cent over Q2 2015 (Table 2), remaining broadly unchanged from Q1 2015. The latest data show that for primary dwelling mortgages, new business fixed rates are below standard variable rates across all fixation categories following recent declines. While SVR rates have remained stable in Q2, fixed rate pricing on new business mortgage contracts has declined. In terms ofnew business PDH contracts, fixed rates have declined by nearly 20 basis points for both the 1-3 and over 5 years categories compared to Q1. In a similar fashion, fixed rates on BTL mortgages, declined by 125 basis points for the 3-5 year fixation cohort.

  • Rates on new business term deposits continued to decline in June 2015 (Chart 1). Rates applicable to NFCs decreased by 5 basis points to 0.13 per cent, while the corresponding rates for households fell by 13 basis points to stand at 0.31 per cent.

...
  • The rate on new floating rate loan agreements[2] for house purchase (which includes renegotiations), was 3.38 per cent at end-June 2015, representing an increase of 7 basis points over the month. The equivalent euro rate was 2.02 per cent. Irish rates have decoupled from their traditional correlation with the MRO benchmark (Chart 2).
 
The CB is at least using proper figures at this stage I presume - and not underestimating the average variable rate any more?

What does this mean?

> Irish rates have decoupled from their traditional correlation with the MRO benchmark (Chart 2).
 
'...SVR rates have remained stable in Q2...' AKA '...SVR rates have remained high in Q2...'

And the English being used - 'remained stable' - they make it sound like a positive development.
 
Brendan Burgess said:
Rates on new business term deposits continued to decline in June 2015 (Chart 1). Rates applicable to NFCs decreased by 5 basis points to 0.13 per cent, while the corresponding rates for households fell by 13 basis points to stand at 0.31 per cent.
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Such a massive decline in term deposit rates in recent years.

Consumers are being paid on average 0.31% when they could get 1.30% if they shopped around.

Irish term deposit rates are, on average, well below Eurozone averages. The ECB says that Eurozone rates for term deposits are on average 0.80% to 1.18% depending on the duration.

Not only are banks fleecing variable rate mortgage holders, they are simultaneously fleecing depositors.
 
CiaranT said:
Irish term deposit rates are, on average, well below Eurozone averages. The ECB says that Eurozone rates for term deposits are on average 0.80% to 1.18% depending on the duration.
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Hi Ciarán

Here are the rates for [broken link removed]

upload_2015-8-14_19-37-54.png



The Irish Central Bank doesn't provide figures for some reason.

I don't know where the Irish Central Bank gets its figure of 0.31% from. I suppose AIB and BoI are the big deposit takers and they determine the average.

It's extraordinary that lenders are leaving Ireland - Danske and Bank of Scotland, while the deposit takers are staying - Nationwide UK and Rabo.

Brendan
 
Brendan Burgess said:
So could you maybe put this in plain English?

"Irish rates have decoupled from their traditional correlation with the MRO benchmark (Chart 2)."
Click to expand...

Historically, Euribor was closely correlated with the ECB benchmark rate.

Similarly, SVRs were closely correlated with the short term Euribor rate (1 week to 3 months).

Pic below generated from the CSO data as I can't include Irish Bank SVRs in my system. Note the dislocation in rates in 2009 where the grey line ceases to track the other 2.
i6wevd.gif


Given the Irish Bank's don't materially fund at the MRO rate anymore there's little surprise in the comment.
 
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