Interest rates in banks and mortgage companies

Deposits on demand is deposits that are available on demand, or after an initial period of one month maximum, and can be used without incurring costs beyond the normal transaction fees.

Deposits with conditions is deposits that cannot be used within one month without incurring costs beyond the normal transaction fees, and deposits that need to be used for a predetermined purpose.

The interest margin in the banks is calculated as the difference between the average interest rate on loans to the public and the average interest rate on deposits from the public. The interest margin on deposits is the difference between the 3-month effective NIBOR on the last working day of the period and the average interest rate level on deposits from the general public. The interest rate margin on lending is the difference between the average interest rate on loans to the public and the 3-month effective NIBOR.

The interest statistics include commission linked to credit loans granted, utilisation commission and current administration fees. Non-recurring commissions, set-up fees and instalment fees are not included in the interest statistics.

Interest rate statistics on outstanding amounts give information about the interest paid and received by households and non-financial corporations, which allows the analysis of any changes in the disposable income of these sectors and their interest burden. From the point of view of the MFIs, the statistics also refer to the interest paid or received, which allows the analysis of changes in interest rate margins and banks’ profitability. Interest rates on outstanding amounts are furthermore needed to calculate the own rate of return on M3 and its components. A more exhaustive list of uses is given in Chapter 2.

Outstanding amounts are defined as the stock of all deposits placed by customers, i.e. households and non-financial corporations, with MFIs, and the stock of all loans granted by these MFIs to their customers.

An interest rate on outstanding amounts reflects the weighted average53 interest rate level applied to the stock of deposits or loans in the relevant instrument category as at the time reference point: • Interest rates on outstanding deposits cover all deposits placed and not yet withdrawn by customers in all the periods up to and including the reference period. • Interest rates on outstanding loans cover all loans withdrawn and not yet repaid by customers in all the periods up to and including the reference period; this excludes bad loans and loans for debt restructuring at rates below market conditions. MFI interest rate statistics on outstanding amounts therefore include the interest rates actually applied to the stock of all deposits and loans.

New loans are defined as any new agreement where the interest rate is set for the first time. Loans that are bought or transferred from another credit source are only considered to be a new loan if the terms for the interest rate or the loan agreement are altered.

Loans with floating interest rates are loans with a remaining fixed rate period of 3 months or less. Loans with fixed interest rates are loans with a remaining fixed rate period of more than 3 months. In the old fixed-interest rate statistics, the loans with floating interest rates were loans with no fixed-interest rate period.

The national accounts classification of institutional sectors is used in the production of the interest rate statistics. The Statistics are divided into 3 main sectors (Local government, Non-financial corporations and Households (Of which employees are included)). Note, that Non-profit organizations are included in Households in accordance with the guidelines of the European Central Bank (ECB).