Dáil Éireann Debate, Thursday - 16 July 2020
74. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which lending rates of interest here can be brought in line with those applicable in other eurozone countries in view of the commitment by Ireland to the Single Market and the need to ensure that consumers here receive equal treatment to their counterparts throughout Europe; and if he will make a statement on the matter. [16447/20]
View answerI am aware that the general level of lending interest rates in Ireland are higher than is the case in many other European countries, though it should also be noted that recent trends indicate that rates have been falling month-on-month.
It will be important to recognise that there are many factors which influence and determine the level of interest charged on mortgages, business and other loans. These include the fact that the pricing of loans needs to reflect credit risks, funding costs, capital requirements (which in Ireland are elevated due to historical loss experience), the size of the market, the level of market competition and lenders' operating costs.
Nevertheless, it is worth noting that interest rates on fixed rate mortgages have fallen from 4% in January 2015 to 2.7% in March of this year. There have also been reductions in the level of interest rates on loans to SMEs from 5.15% to 4.25% over the period from the first quarter of 2015 to the end of 2019, as well as reductions in interest rates on consumer loans (for example, from 8.3% to 7.23% APRC on consumer loans over the same period). These lower interest rates bring the interest rates available to Irish consumers and businesses closer to the Euro area averages.
As demonstrated by the recent meetings the Tánaiste and I had with the main banks, the Government will continue to work with the industry to see if any there are further appropriate measures that can be deployed to ensure that the banks can prudently, sustainably and as cost effectively as possible provide new credit to businesses and households.
