The Central Bank continues to publish misleading mortgage rate stats

Brendan Burgess

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Statistics releases 14November 2014

Retail Interest Rate Statistics; Updated Money and Banking Statistics

The Central Bank of Ireland has today released the following information releases and data series

Retail Interest Rate statistics – September 2014


The interest rate on new loan agreements to households for house purchase, with either a floating rate or initial rate fixation of up to one year, was 3.47 per cent at end-September 2014, representing a 25 basis point increase from the end-August rate. The corresponding interest rate at end-September for the euro area was 96 basis points lower at 2.51 per cent. Loans in this category accounted for 89 per cent of all new mortgage business in the domestic market over the past year. In contrast, floating rate loans in the euro area accounted for 25 per cent of new mortgage business over the same period.
 
It is astonishing that the Central Bank continues to publish this rubbish. Even the Governor knows that it is misleading. This is what he said on 6th October

[broken link removed]

 
The Oireachtas Finance Committee asked the four main lenders the following question this week:

Q19. What is the average rate you are charging for new mortgages for owner occupied home loans? Please include genuine new business only and
do not include restructured trackers or restructured variable rate mortgages.

permanent tsb (the only lender to answer the question asked)

Our average rate charged on new mortgage lending up to 31/10/2014 (end of week 44) for home loan customers was 4.30%


Ulster Bank response:

Ulster Bank offers a variety of mortgage interest rates and product with rates ranging from 3.7% to 4.5% (3.8% - 4.6% APR) depending on the
circumstances and requirements of the borrower.

AIB
Attached a table showing rates ranging from 3.8% ( LTV <50%) to 4.25% (LTV >80%)

Bank of Ireland

Attached a table showing rates ranging from 4.1% (LTV <50%) to 4.5% (LTV > 80%)
 
Why not take this to a political party and ask them to submit it as a parliamentary question?

The Minister would be obliged to investigate and the Central Bank obliged to respond.
 
I asked Brian Hayes MEP to complain to the ECB which he did. They wrote back saying that the CB was calculating the new business rate correctly.

He is seeking a meeting with them to explain why the data produced by the CB is nonsense.

Brendan
 
Have the CBI committed to changing the reported data at some stage in the future? I thought I read something to that effect.
 
From the New Year, the ECB wants the Central Banks to report separately the "new business including renegotiated mortgages" and "pure new business" rates.

Brendan
 
From today's Irish Times:

Brian Hayes to raise mortgage rate data with ECB

Central Bank figures for mortgage rates ‘distorted’, claims MEP

Brian Hayes: there “seems to be a lack of understanding on the part of the ECB as to the specific nature of tracker mortgages and the number of them on the books of Irish banks”
Click to expand...

and

 
And the banks will just say, yet again - as they did in the Oireachtas Finance Committee, that the ECB rate has nothing to do with their cost of funds and the variable rates they charge...
 
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