Joe Carey (Clare, Fine Gael)
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198. To ask the Minister for Finance the pressures he is putting on banks and other financial institutions to raise the interest rates on moneys that are held on deposit in view of the fact that interest rates on mortgages continue to rise; and if he will make a statement on the matter. [7773/23]

Michael McGrath (Cork South Central, Fianna Fail)
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Neither the Central Bank of Ireland nor I have a role in prescribing or setting the interest rates offered by banks, on either monies held on deposit or on mortgages or other credit facilities.

These are commercial matters and are the sole responsibility of the board and management of the banks. Although the State is a shareholder in some of the banks operating in the State, those entities must also be run on a commercial and independent basis, and their independence in this regard is protected by the relationship framework agreements.

In terms of the interest rates available on deposits, I am informed by the Central Bank of Ireland, that:

- Interest rates on household overnight deposits in Ireland stood at 0.03 per cent in December 2022, while the euro area equivalent was 0.07 per cent;

- Interest rates on new household deposits with agreed maturity rose to 0.63 per cent in December 2022 (0.48 per cent in November 2022) and (0.13 per cent in December 2021) in Ireland. The equivalent rate in the euro area was 1.44 per cent.

It is worth noting that at end-December 2022, €148.5 billion was held on deposit by Irish households with Irish resident credit institutions, of which €139.1 billion was in overnight deposits and €2.6 billion was on deposit with an agreed maturity. This is an unusually large share of monies held in overnight deposit by historical standards and it reflects two factors.

When interest rates were low (or negative up until July 2022), there was effectively little or no difference between the return on overnight versus term deposits for savers.

The large difference between interest rates on term deposits (0.63% in Ireland in December 2022) and overnight deposits (0.03%) is typical of rate hiking periods, and implies an increased opportunity cost of holding overnight deposits.

Over time, it would be expected to see some flow from overnight to term deposits for savers to achieve a greater return. Increasing competition to attract these relatively stable sources of funding could also contribute to a greater pass-through of policy rates into deposit rates over time.

The Deputy may also wish to note that the Competition and Consumer Protection Commission's (CCPC) website includes a number of comparison tools to help consumers shop around. These tools can be used to compare the features and rates of both lump sum deposit products and regular savings accounts.