Quarterly Bulletin Q3 2013

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52 Financing Developments Quarterly Bulletin 03 / July 13 in the Irish Economy that are in arrears on the current restructuring arrangement. New data indicate that 76 per cent of restructured PDH accounts were deemed to be meeting the terms of their arrangement. This means that the borrower is, at a minimum, meeting the agreed monthly repayments according to the restructure arrangement. However, of the total stock of PDH accounts in arrears over 90 days at end- March 2013, only one quarter of these were classified as restructured at that time. Progress in tackling longer-term arrears cases has been limited thus far, and restructuring activity undertaken to date has for the most part been short-term in nature. Lenders have recently introduced new loan modification options with the aim of providing longer-term and more sustainable solutions for borrowers in arrears. Existing mortgage holders continued to experience an increase in the cost of their borrowings over the last six months. The weighted average interest rate on existing mortgage loans with an original maturity over five years increased by 8 basis points, to 3 per cent, over the six months to end-April 2013. Meanwhile, interest rates on existing loans for consumption and other purposes also increased, with the weighted average rate rising by 58 basis points to 6.19 per cent over the same period. 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Chart 23: Mortgage Interest Rates to Households Per cent per annum Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Basis points Jan Mar 2009 2010 2011 2012 2013 New floating rate mortgages, interest rate (LHS) New mortgages, fixed for over one year, interest rate (LHS) Outstanding mortgages, interest rate (LHS) New floating rate mortgages, margin over ECB MRO (RHS) New mortgages, fixed for over one year, margin over ECB MRO (RHS) Outstanding mortgages, margin over ECB MRO (RHS) Source: Retail Interest Rate Statistics, Central Bank of Ireland. 400 350 300 250 200 150 100 50 0
53 Developments in the International and Euro Area Economy Overview Accommodative policies continue to support growth in the global economy which has been slower than anticipated, fragile and diverse across economic regions. Emerging economies are continuing to underpin the improvement in global economic conditions with activity in the US and Japan also gathering pace. Total debt levels in these key advanced economies remain elevated despite progress in the rebalancing of private sector indebtedness. On the other hand, activity has remained hesitant in the euro area, with some Member States continuing to record a contraction in activity and very high unemployment rates. Survey indicators have been signalling a stabilisation in business sentiment and risk perception. Chinese data warrant monitoring for downside risks to growth, especially given the strong contribution of Chinese investment to global GDP. Following a period of sustained improvement, global financial market conditions have weakened somewhat. Euro area inflation rates have drifted downwards and remain low while inflation expectations are generally well-anchored. The global economy is moving forward, but divergence between regions and countries reflects the uneven progress made towards a recovery from the economic crisis. Latest data suggest that global trade momentum moderated during the first quarter of 2013, followed by some pick up in April, with advanced economies in particular contributing to the weaker-than-expected dynamics. Despite a strengthening of Chinese import growth in the first quarter of 2013, elsewhere, a more general deceleration in import growth cut across both high-income and emerging regions. In the near term, weak confidence and high uncertainty, particularly in Europe, are likely to remain significant headwinds to global growth and the demand for durable and investment goods – items with high import content – could restrain the pace of the global trade recovery. Surveys, in particular an upturn in new export orders, are indicating an expansion in global trade, albeit gradual. As such, global growth indicators continue to signal moderate growth in the second half of the year. Financial market sentiment improved over the last year principally due to policy actions, particularly in a number of advanced economies. Risk perceptions including the threat of a euro area break-up and a sharp fiscal contraction in the US associated with the full fiscal cliff, appear to have diminished. However, since late May, market sentiment weakened primarily due to weak economic data from China and the euro area, as well as discussions of the possible tapering of the US Federal Reserve’s asset purchasing programme. According to the latest OECD projections, real GDP in the euro area is expected to decline by 0.6 per cent this year and rebound only by 1.1 per cent in 2014 (Table 1). In the US, private demand and growth prospects look to be somewhat stronger with activity projected to rise by 1.9 per cent this year and close to 3.0 per cent in 2014. Moreover, Japanese real GDP is expected to grow by between 1.4 and 1.6 per cent both this year and next. Downside risks to the advanced economy growth outlook have reduced, but remain significant. Adverse interactions between fragile banking systems, government finances and the real economy remain a risk in the euro area. Fiscal concerns will feature in both the
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JULY 13 Q3 Central Bank Quarterly B
Page 5 and 6: Contents Section 1 Forecast Summary
Page 7 and 8: Section 1 Quarterly Bulletin 03 / J
Page 9 and 10: 7 Comment Annual National Accounts
Page 11 and 12: 9 The Domestic Economy Overview n A
Page 13 and 14: The Domestic Economy Quarterly Bull
Page 33 and 34: 31 An Timpeallacht Gheilleagrach Le
Page 35 and 36: 33 Financing Developments in the Ir
Page 37 and 38: Financing Developments in the Irish
Page 53: Financing Developments in the Irish
Page 57 and 58: Developments in the International a
Page 73 and 74: 71 EU-IMF Financial Assistance Prog
Page 75 and 76: EU-IMF Financial Assistance Program
Page 77 and 78: EU-IMF Financial Assistance Program
Page 79 and 80: 77 Developments in EU Financial Ser
Page 81 and 82: Developments in EU Financial Servic
Page 83 and 84: Developments in EU Financial Servic
Page 85 and 86: Section 2 Quarterly Bulletin 03 / J
Page 87 and 88: Analysis of Recent Monetary Operati
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Section 3 Quarterly Bulletin 03 / J
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Statistical Appendix Quarterly Bull
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