Dáil Éireann Debate, Tuesday - 18 April 2023
424. Deputy Seán Haughey asked the Minister for Finance his views on the rise in interest rates in recent months; if he is aware of the concerns of savers who are disappointed that the interest rate given on deposit accounts is not increasing in line with interest rates rises on mortgage accounts; if he will raise this issue with the Central Bank; and if he will make a statement on the matter. [18199/23]
View answerThe 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 neither the Central Bank nor I have any 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.
