26 September 2023

By Ralica Müller and Matthias Rumpf

Information on the interest rates that commercial banks offer their customers for loans and deposits plays a pivotal role in shaping monetary policy. It is also crucial to gauge the extent to which interest rates differ from one euro area country to another. These data provide insight into how the ECB’s decisions on key interest rates are transmitted to the real economy.

But conducting such comparisons is not straightforward, as the terms and conditions associated with loans and deposits also vary. For instance, some countries typically offer fixed interest rates for housing loans over an extended period, while others tend to favour loans with variable rates. This means comparing interest rates for the same type of loan may not accurately reflect the market reality.

To address this challenge, the ECB has devised composite cost of borrowing indicators, which incorporate various types of loans and assigns weights based on their significance in a particular market. This methodology enables a meaningful comparison of bank interest rates across countries.

Chart 1 illustrates the cost of borrowing for housing in the euro area, while Chart 2 presents the composite cost of borrowing for businesses. You can use the selector at the top of each chart to compare euro area trends with trends in individual countries.




More information

Composite cost of borrowing indicators


Related dataset

MFI Interest Rate Statistics


The views expressed in each article are those of the authors and do not necessarily represent the views of the European Central Bank and the Eurosystem.