The Irish Financial Services Regulatory Authority has said the Irish variable rate mortgage market offers good value for money compared with other European countries.
IFSRA today published an interest rate survey which examines the extent to which changes in interest rates are passed on to consumers. The survey, which covers the period from January 1 1998 to June 30 2003, also considers how long it takes for financial institutions to pass on interest rate changes to their consumers.
It looked at interest rates charged and paid on a selection of commonly held retail lending and deposit products from 16 credit institutions. It focused on products that are capable of reacting to interest rate movements in the short-term and measured the difference between the advertised interest rates and the official ECB interest rate.
IFSRA says it found no evidence to suggest that rate hikes are passed on more quickly than rate cuts in the mortgage market, but it says spreads - the difference between advertised interest rates and the official ECB interest rate - have widened since May 2001.
On non-mortgage lending, IFSRA says cuts in official rates since May 2001 have not been passed on to consumers, and banks' margins have widened. The study finds that spreads on loans and overdrafts to individuals and small businesses seem wider in Ireland than in the euro zone in general.
IFSRA says spreads on deposits have fallen, but rates paid on demand and notice deposits are lower in Ireland than elsewhere in the euro zone.
The survey also concluded that with the exception of the mortgage market and to some extent deposits, retail interest rates seem largely unresponsive to interest rate movements.
IFSRA's consumer director, Mary O'Dea, said that the aim of the survey was to foster competition by adding transparency to the market and highlighting the rates charged and paid by institutions.
The Irish Bankers' Federation welcomed the findings on the mortgage rate, but criticised the exclusion of fixed-rate lending from the survey.
