An interesting chart of rates charged on new business loans across SMEs and households - my calculations based on Table B.2.1 from the Central Bank database:
In April 2011, the spread between Non-Financial Corporate Loans volume under €1 mln over those for house purchases were:
- Floating rate and up to 1 year fixation corporate loans v similar house purchase loans: 1.54 percentage points, up from 1.18 in March and well above the historical average spread of 1.16 percentage points. Historical average spread for the period January 2008-present is 1.23 percentage points. April 2011 new business rate spread is the highest since January 2009.
- Over 1 year fixation rates spread stood at 1.88 percentage points in April, up on 1.63 percentage points in March 2011. Historical average is 1.02 percentage points and average spread for the period since January 2008 is 0.99 percentage points.
Hence, overall, setting aside the pesky issue that very little new credit is issued by the banks, current credit conditions are clearly pricing historical highs in terms of risk premium for smaller corporate loans. For businesses operating in Ireland, the credit crunch is only getting crunchier, it seems.
In April 2011, the spread between Non-Financial Corporate Loans volume under €1 mln over those for house purchases were:
2 comments:
What this chart masks what the trends over time in the actual rates are. Interesting to include a comparison chart of not only risk premium as displayed but also average rates for corporate and household. Also interesting to see a significant decline in SME risk premiafrom highs in September 2009 to near average lows in mid 2010
Thanks for sharing this post with us. It's really an amazing post. Keep posting the good work in future too.
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