Cost of Mortgages Fall – Central Bank

New research from the Central Bank shows that interest rates on mortgages have fallen.

Mortgage costs have fallen while loans and credit cards have risen

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 2.98 per cent at end-May 2012. This was 2 basis points lower than at end-April 2012 and 44 basis points below the rate reported at end-September 2011. This means that many mortgage holders here now pay some of the lowest mortgage rates in the Eurozone.

Central Bank statistics also show that the cost of credit cards and overdrafts have gone up slightly. The average interest rate on cards, one-year loans and overdrafts charged to households rose slightly in May to 8.68pc.

Overdraft rates range from just under 10% to almost 16% between various banks. In addition,  surcharge interest of up to 12pc is charged for an unauthorised overdraft.

The Central Bank said the interest on loans to buy items such as cars were also up, at an average of 5.88pc.

The ECB cut rates to a new historic low this month.

Earlier this month, the European Central Bank cut its benchmark lending rate to a new historic low of just .75%. AIB has already announced that it will not pass on the latest rate reduction to its Standard Variable Rate (SVR) customers. EBS (now part of AIB), Bank of Ireland, National Irish Bank, KBC Bank, Irish Nationwide (now part of IBRC) — are still considering whether to pass on the latest cut to variable customers. Permanent TSB and Ulster Bank have both announced that they will pass on the latest rate cut. Bank of Scotland, which includes Halifax said it will pass on the full value of the latest rate cut. However, it is not expected that Bank of Scotland/Halifax have many SVR customers to begin with as they  was the first bank to introduce tracker mortgages as a way of building market share in the early 2000’s. .

Deposit interest mixed

Central Bank statistics also shows that the interest being paid on short-term deposits have fallen while interest paid on longer term deposits (18 months and greater) have risen slightly.

Many banks have recently been forcing more customers to keep higher balances with their bank as a means of avoiding fees and charges. They have also been structuring their services that reward only those that can lock away funds for longer periods of time.

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