"Political pressure to reduce mortgage rates may damage recovery" - EU official tellls Brian Hayes

Ciarán Hancock in today's The Irish Times reports today that Marco Buti, Director-General for Economic and Financial Affairs has responded to a letter from Brian Hayes.

Squeezing mortgage interest rates through “political pressure” could undermine the progress made by Ireland towards “healing the domestic financial system”,

He cited the finding in a report by the Central Bank of Ireland in May on the reasons for the higher SVRs here: elevated credit risks in Ireland due to the still-high levels of nonperforming loans and the lengthy and uncertain process around collateral recovery, a lack of competition due to the higher credit risks and bank profitability being constrained by legacy issues.

“We fully concur with this analysis,” Mr Buti said.

This sort of mis-informed analysis based on the rubbish from the Central Bank is very annoying.

I don't think anyone would disagree that mortgage rates should reflect the underlying credit risks. But why has neither he nor the Central Bank sought to quantify it?

There is virtually no risk in 50% loan to value mortgages. Sure there may be defaults, but there will be no losses arising from those defaults, even if it takes 10 years to repossess the security.

The high levels of mortgage arrears have been fully provided for by the Irish banks. They are now writing back those provisions, so these are no longer sources of losses. They are actually sources of profits.

He cited the finding in a report by the Central Bank of Ireland in May on the reasons for the higher SVRs here:... a lack of competition due to bank profitability being constrained by legacy issues.

Legacy issues should not be a constraint on competition. A new entrant to the market will not have the legacy issues i.e. cheap trackers to deal with. The Irish banks non-tracker business is extortionately profitable. While there are no new entrants, the banks are simply exploiting the non-tracker customers. If a new entrants comes into the market, all these excuses will go.

Brendan,

Here, here, more goobilygook utterances from the Central Bank of Ireland that on inspection do not stand up to scrutiny. As for Marco Buti, an alleged professional and a director within the Commission, shame on you. ( analysis my foot )

I like you're previous posting Brendan. Glad you mentioned the exploitation of non-tracker holders, as I have said in previous postings on other threads it's because they can and will continue to do so until they're stood up to, the same way a bully will continue to bully until he or she is stood up to. My contract says that the interest rate can be changed at the lenders discretion, obviously stupid on my part that I would accept a contract that gives them such power over me but without it I couldn't have got a place to live. As a taxpaying citizen of the state i and anyone else have been failed by every arm of this state on this issue and will continue to be because they have been able to get away with doing nothing for us. They have the power to deal with the bullying banks but won't and then you have the likes of Marco But I who I am sure is at worst on a salary of €150,000 and if he has a mortgage is paying no more than the average European svr rate dictating like that to me, it makes me sick. I'm sure he doesn't know what it's like to feel like a sucker, I and another few thousand have learned as per usual the hard way In this country, I just wish we had at least10% of the SVR holders in this country on board and maybe then we could take some real action. I do hope that the least the non-active ones will do something for us and vote for the parties or groups in the upcoming election that give us most support, support which for the most part has been very weak with a small handful of notable exceptions, eg Michael McGrath. Hopefully yourself Brendan if you're reading this and the campaign will issue recommendations regarding this in advance of the election.

I am not a mortgage holder but even I can see that this campaign is for the greater general good in Ireland. However, I would caution against expecting too much from the utterances of opposition TDs who say what they think people want to hear. I'm sure their opinion would change on the advice of an 'expert' they'd recently been advised by, once they got into power.
Furthermore, the current administration have shown their hand in this matter.

Brendan Burgess said:

Ciarán Hancock in today's The Irish Times reports today that Marco Buti, Director-General for Economic and Financial Affairs has responded to a letter from Brian Hayes.

Squeezing mortgage interest rates through “political pressure” could undermine the progress made by Ireland towards “healing the domestic financial system”,

Click to expand...

No one wants to undermine any progress that has been made thus far, but it is entirely unfair to put the burden of this healing on the backs of the svr paying customers.

Spread the load across the entire population everyone benefits from a properly functioning financial system, why do the the svr customers have to pay for it all.

The government should make a move on the high svr issue to have it reduced, and then if the bank share holders are not happy with the profits, the government can pay them some more of the tax payers money.

Why should the svr customers prop up the banks.

yep, not to Labour the point but Frankfurt's way or .... way( insert as required)

I am surprised, this thread is 3 days old, and the bankers have failed to post a contrarian viewpoint to everything posted sofar. Perplexed ?

Bamocom said:

I am surprised, this thread is 3 days old, and the bankers have failed to post a contrarian viewpoint to everything posted sofar. Perplexed ?

Click to expand...

I think the bankers know at this stage that they don't have todo anything, the government has got there back.

Fine Gael has shown it's hand on the svr issue and what's more has allocated 28 million euro to train MABS personnel to be pip's: to speed up the process of repossession !