Interest rates for some new mortgages in the euro zone fell for the fifth month in a row in January, but other household borrowing costs rose, according to data published by the European Central Bank today.
The average interest rate charged for a new mortgage to purchase a home with a five-to-10 year fixed rate dropped to 4.43 per cent in January 2005 from 4.49 per cent in December 2004, the cheapest rate since ECB records began in January 2003.
ECB policymakers have expressed concern that cheap credit is fuelling sharp rises in house prices in some euro zone countries, which they believe could lead to an asset bubble or feed inflation in the future.
But other households' borrowing costs rose, including mortgages with shorter and longer fixed rates. Rates fixed for more than 10 years rose to 4.45 per cent in January from 4.41 per cent in December, the ECB said.
Floating rate loans and those with a rate fixed for up to one year saw the interest charged inch up to 3.44 per cent from 3.43 per cent over the same period.
Issuance of these loans also eased a little to €26.6 billion, the lowest level in five months.