Frontier Statistics: Mortgage Interest Rate Distributions (June 2024)

Background

Interest rates on Principal-Dwelling Home (PDH) mortgage loans can vary widely between borrowers and lenders. These differences are not captured fully by the weighted averages published in official statistics. In order to paint a fuller picture of the Irish mortgage interest rate environment than what is provided by official statistics alone, the Central Bank is publishing full PDH mortgage interest rate distributions for loans held by three entity types: banks, lending non-banks, and non-lending non-banks. Lending non-banks are non-bank entities that originate their own mortgage lending, while non-lending non-banks are the non-bank entities that hold residential mortgage loans, but do not originate lending themselves (i.e. they purchase loans from originating institutions).

Key Observations

  • Non-lending non-banks hold a higher concentration of mortgage loans at the low end of the distribution than lending non-banks or banks, but also have the highest median interest rate, at 5.5 per cent.
  • The median interest rate on bank-held mortgages at end-June 2024 was 3.95 per cent.
  • The median interest rate on mortgages held by lending non-banks was 2.85 per cent.
  • The median interest rate on residential mortgages was higher in June 2024 than it was one year prior for all three institution types.

 

Cumulative Distributions

Table 1: Cumulative Distribution by Institution Type, June 2024
Interest Rate Bucket Bank (%) Lending non-bank (%) Non-lending non-bank (%)
≤ 0.5 1.13 0.34 14.71
≤ 1.0 1.14 0.34 14.95
≤ 1.5 1.14 0.34 15.60
≤ 2.0 1.43 13.69 16.13
≤ 2.5 13.86 35.64 16.69
≤ 3.0 29.07 53.58 19.29
≤ 3.5 40.43 59.08 20.39
≤ 4.0 50.88 76.46 22.29
≤ 4.5 66.62 88.46 26.13
≤ 5.0 77.28 92.17 33.06
≤ 5.5 89.02 93.32 53.83
≤ 6.0 98.42 94.55 70.97
≤ 6.5 99.47 97.89 76.94
≤ 7.0 99.82 99.80 82.81
≤ 7.5 99.95 99.95 85.25
≤ 8.0 99.96 100.00 90.50
≤ 8.5 99.96 100.00 97.68
≤ 9.0 99.98 100.00 98.93
> 9.0 100.00 100.00 100.00

Chart 1 (below) compares the cumulative distributions of mortgage interest rates at end-June 2024 for banks and non-banks, which are further split into lending non-banks and non-lending non-banks. Each cumulative distribution shows the proportion of loans held by each entity type, which have interest rates less than or equal to a given rate.

Intervals where the curves are steeper are interest rate ranges where loans are more highly concentrated. For instance, loans held by non-lending non-banks are more highly concentrated between 5 per cent and 6 percent than at other interest rate intervals. This range contains nearly 38 per cent of all such mortgages, while the remaining loans are spread more evenly through the distribution.

In contrast to non-lending non-banks, lending non-banks and banks hold relatively fewer mortgages at the high and low ends of their respective distributions.

Chart 1: The distribution of mortgage interest rates varies by institution type.

Cumulative Distributions by Entity Type, June 2024

 

Cumulative distributions of Principal-Dwelling Home (PDH) mortgage loan interest rates broken down into loans held by banks, lending non-banks, and non-lending non-banks as of June 2024.

Chart 2 (below) shows the shift over the previous year of each cumulative distribution. Each of the three curves largely shifted right, indicating an increase in the number of mortgages with higher rates.

Chart 2: The Distribution of mortgage interest rates has shifted over the past year for each entity type.

Change in Mortgage Interest Rate Distributions, June 2023-June 2024

Cumulative distributions of Principal-Dwelling Home (PDH) mortgage loan interest rates broken down into loans held by banks, lending non-banks, and non-lending non-banks, between June 2023 and June 2024.

Mortgage Interest Rate Percentiles

Table 2: Mortgage Interest Rate Percentiles, June 2024

Percentile Bank (%) Lending non-bank (%) Non-lending non-bank (%)
10 2.35 2.00 0.00
20 2.75 2.25 3.30
30 3.03 2.40 4.76
40 3.50 2.55 5.25
50 3.95 2.85 5.50
60 4.21 3.60 5.75
70 4.66 3.85 6.00
80 5.20 4.10 6.64
90 5.54 4.75 8.00

Table 2 presents the interest rate distributions in terms of percentiles, which provides the ability to see the median interest rate on Irish mortgages across all three entity types.

As of June 2024, non-lending non-banks have the highest median interest rate on mortgage loans, while lending non-banks have the lowest.

Chart 3 (below) shows that at the 20th, 50th, and 80th percentiles, interest rates generally increased between June 2023 and June 2024.  Furthermore, in June 2024 non-lending non-banks had mortgages with the highest interest rates across nearly the whole distribution, though these entities also hold a larger proportion of loans at the very low end of the distribution relative to lending non-banks and banks.

In June 2024, the median interest rate on mortgage loans held by non-lending non-banks was higher than the 80th percentile of interest rates on bank-held loans.

Chart 3: Non-lending non-banks have the highest mortgage rates throughout the distribution.

Change in mortgage interest rates between June 2023 and June 2024

Vertical bar chart showing the 20th, median, and 80th percentiles of interest rates on outstanding Principal-Dwelling Home (PDH) mortgage loans, broken down into loans held by banks, lending non-banks, and non-lending non-banks.

Data

Interest Rate Data Table 1 | xlsx 9 KB Interest Rate Data Table 2 | xlsx 8 KB

Related Publications