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Irish borrowers pay higher interest on short-term loans than Eurozone counterparts

Central Bank figures also show the average interest rate on an outstanding mortgage has fallen 0.22 per cent since January.

Irish people pay higher interest on short-term loans - including overdrafts and credit card debt - than the average Eurozone borrower.
Irish people pay higher interest on short-term loans - including overdrafts and credit card debt - than the average Eurozone borrower.
Image: Charlie Riedel/AP

IRISH BORROWERS pay significantly higher interest on short-term borrowing than people living elsewhere in the eurozone, new figures have shown.

Data published yesterday by the Central Bank shows that the average interest rate on loans falling due within a year stood at 9 per cent in August, an increase of 0.05 per cent when compared to July.

By comparison, the average interest rate for similar loans in the eurozone as a whole was 7.77 per cent – much lower than the rate applied in Ireland.

The Central Bank includes short-term loans for consumption, overdrafts and credit card debt in this short-term category.

The data also shows that the interest rate on the average Irish mortgage fell in the first eight months of this year.

The weighted average interest rate on mortgages which have over five years left to run is 2.84 per cent, down from 3.06 per cent at the start of the year.

Over 99 per cent of mortgages fall into the category mentioned. The interest rates applied to those mortgages fell by 0.02 per cent in August.

The decreases can largely be attributed to the 0.25 per cent fall in the ECB’s main interest rate this year – the rate was cut in July – which takes a direct effect on the interest rates of tracker mortgages.

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Variable mortgage interest rates usually, though not always, adjust their rates to correspond to the ECB rate.

The interest rate on other household loans fell to 5.74 per cent at that time, down almost 0.6 per cent so far in 2012. The interest on five-year loans at the end of August stood at 3.98 per cent, which is down by 0.45 per cent compared to the same point in 2011.

Read: Kenny says AIB mortgage hike necessary to avoid further taxpayer bailout

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Gavan Reilly

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