Long-term saving rates still lagging behind euro area average despite reaching 15-year high

Irish savers continue to switch to long-term accounts as new business rises 44% in the month

Despite an almost 15-year high, Irish saving rates still lag significantly behind the euro area average of 3.27% and have been found by rating agency Standards and Poor to have one of the worst transmissions of deposit rates to consumers out of the entire eurozone, US and UK. Photo: Leah Farrell/Rollingnews.ie

Interest on new long-term household deposits has risen to its highest rates since January 2009 as savers shift from overnight and current accounts to ones with a longer, fixed maturity.

New figures from the Central Bank show the average interest rate with an agreed maturity rose by 5 basis points to 2.59% in October, reflecting an almost 15-year high, according to the regulator. 

It also noted that new business in this area has surged to its highest in almost three years as savers take advantage of higher interest rates compared to easy access accounts, with fixed term offerings seeing a 44% monthly increase in new customers in October. 

In annual terms, demand for fixed maturity deposit accounts surged by 800%, however, the Central Bank noted that this was still "well below" historical levels seen pre-2021.

In total, Irish savers put €1.34bn into these accounts in October, the highest in any month since January 2021, the regulator said.

Despite an almost 15-year high, Irish saving rates still lag significantly behind the euro area average of 3.27% and have been found by rating agency Standards and Poor to have one of the worst transmissions of deposit rates to consumers out of the entire eurozone, US and UK.

For overnight deposits, interest rates on rose by 1 basis points to 0.12% in October 2023, now standing at the highest level since November 2016.

On the lending side, mortgage rates for Irish households decreased slightly from 4.30% recorded in September to 4.27%, however, this is still up by 1.7 percentage points compared to a year ago.

Despite the marginal fall, The Central Bank said Ireland had the joint seventh highest rates in the Eurozone alongside Austria, and remained 20 basis points above the EU average of 4.07%.

For companies, interest rates on overnight deposits remained unchanged at 0.11% in October 2023, while rates on new deposits with agreed an maturity fell to 3.70, which matched the euro area average.