IRISH PEOPLE WHO take out mortgages are still paying more for loans than the euro zone average, despite recent savings.

Research published today by the Central Bank shows that Irish people pay around 3.15% interest on new mortgages, higher than the 2.64% paid in Europe.

By contrast, the cost of servicing existing mortgages has fallen considerably, and at 2.74% is in fact lower than equivalent loan charges in the rest of the euro zone.

The average cost of servicing existing Irish mortgages usually follows wider cuts in European Central Bank interest rates, due to the high proportion of tracker mortgages on the books of Irish banks.

However, the Central Bank said that this relationship is beginning to weaken as banks focus on moving loans away from trackers.

Deposits

Meanwhile, depositors continue to be penalised for leaving their cash in banks, with the average interest rate on household term deposits declining to 1.93%. These rates have been on the slide since May 2012.

There was good news for SMEs, however the average interest rate on loans to non-financial corporations for under €1 million (which is generally used as a proxy for SME lending) coming down by 23 basis points since May.

Nonetheless, Irish money is still more expensive for small businesses than in the rest of the currency bloc, where loans come with an average interest rate of 3.57% compared to 4.9% in Ireland.

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