Dáil Éireann Debate, Tuesday - 9 May 2023
227. Deputy Cian O'Callaghan asked the Minister for Finance further to Parliamentary Question No. 422 of 18 April 2023, the action he will take to protect the interests of people in Ireland when adopting decisions from the European Central Bank in relation to mortgage interest rates; how Ireland compares to other European countries in terms of mortgage and savings rates; and if he will make a statement on the matter. [21772/23]
View answerThe formulation and implementation of monetary policy is an independent matter for the European Central Bank (ECB). As the Deputy is aware, and as set out in Parliamentary Question No. 422 of 18 April 2023, the ECB has increased official interest rates over recent months as it attempts to combat inflation.
The level of official interest rates influences the overall level of interest rates throughout the economy. However, the setting of retail lending and deposit rates by individual financial institutions is a commercial matter for the particular entity 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 at end-February 2023 was 2.92 per cent and is now among the lowest in the euro area; the comparable average interest rate for new mortgages in the euro zone was 3.33%.
Also it should be noted that the structure of the Irish mortgage market is changing and that there is an increase in the take up of fixed rate mortgages - in February 2023 for example 93% of new mortgages were at a fixed interest rate - and this protects borrowers from interest rate changes for the period that the interest rate is fixed.
In relation to savings rates, the Central Bank has advised that the interest rates on household overnight deposits stood at 0.03 per cent in February 2023. Interest rates on new household deposits with an agreed maturity rose to 1.02 per cent in February in Ireland. The equivalent rate in the euro area was 1.92 per cent.
