Indeed, the lower policy interest rates set by the ECB since the crisis began have only been partly transmitted to borrowers in Ireland and in the other stressed euro area countries (Figure 6).
(As is seen by the results of a recursive regression exercise, the pass-through from policy rate to Irish residential mortgage SVR rates has halved since the start of the crisis – Figure 7.) Some of this can be rationalised as reflecting a higher credit risk-premium being charged by the banks, but some is also due to the higher marginal cost of funds.