Interest Rates

Dáil Éireann Debate, Tuesday - 18 April 2023

Tuesday, 18 April 2023

Questions (422)

Cian O'Callaghan

Question:

422. Deputy Cian O'Callaghan asked the Minister for Finance if his attention has been drawn to the large hikes in mortgage rates without the corresponding increase in savings rates for banking customers; if he will take action to ensure banks are required to increase savings rates alongside mortgage rates; and if he will make a statement on the matter. [18185/23]

Written answers

Minister for Finance

The formulation and implementation of monetary policy is an independent matter for the European Central Bank (ECB). As the Deputy is aware, the ECB has increased official interest rates over recent months as it attempts to combat inflation.  The level of official interest rates will influence the overall level of interest rates throughout the economy. 

However, the determination and adjustment of retail and business lending rates and deposit rates  are commercial decisions for individual lenders in line with the terms of the particular credit or savings contract and I have no function or role in such decision making matters by financial institutions.

Nevertheless, it is worth noting that the weighted average interest rate on new Irish mortgage agreements charged by credit institutions in Ireland at end-February 2023 was 2.92 per cent (compared to 2.76% in February 2022).  The comparable average interest rate for new mortgages in the euro zone was 3.33% in February 2023, up from 1.36% in February 2022.  The rate on new Irish mortgage agreements has now been less than the euro area average since October 2022 and is now the third lowest in the euro area.

In relation to savings rates, the Central Bank has advised that interest rates on household overnight deposits stood at 0.03 per cent in February 2023. Interest rates on new household deposits with agreed maturity rose to 1.02 per cent in February in Ireland.

The equivalent rate in the euro area was 1.92 per cent. Interest rates on outstanding deposits’ rates with agreed maturity was 0.35 percent in February 2023 an annual increase of 25 basis points since February 2022.