How come the rates are dropping? BOI gave 4.5% at the start of the year on a significant wedge, 3% at mid year, and they say it's going to drop to one-point-something next year. And that's even after they stop paying a 1.5% levy to the government for the ELG. I know the higher rates are unsustainable, but it's not like Irish banks have suddenly become any safer. At less than a couple of percent they are probably less attractive than earning zero outside the country for safekeeping.
A year ago, we were in post bank run mode, the ECB were raising rates, the banks had to meet IMF loans-to-deposits ratios, ELA was raising and the UK wings of the Irish banks were under the ELG.
A year later, deposits have stabilised, the ECB are reducing rates, the banks are getting closer to the 122.5% loans-to-deposits IMF target, ELA is reducing and the Irish banks are using their UK wings as a proxy for non-ELG high rate deposit gathering.
Good points, and I guess I am evidence of the inertia factor myself, being constantly on the cusp of moving cash out of BOI and not being able to think of a sensible alternative. However, I do have a Rabo account, and below a certain rate in BOI that's where the money will go, for perceived greater safety reasons. Also, if one is sticking with the euro currency for the medium term, one might as well consider the various Irish state savings schemes, which still -- grossed up for non-DIRTness -- pay the equivalent of four or five percent. (Can anyone tell me how often these schemes are renewed and subject to new rates?).
It has been a very long time since the NTMA have changed State Savings deposit rates. Some NTMA rates are determined by legislation.
Anyway, if you are getting a grossed up 4%-5%+, the rate will be locked for between 3 years to 5 years 6 months, at account opening stage.