ECB up 0.25%

As expected the ECB has raised it's base rate to 1.25%.

Adds around €15 per €100,000 to a tracker mortgage.

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No suprise, but another downfall for being a member of the eurozone!

Whilst the larger economies recover, people in Ireland, Greece, Portugal really are being asked to get blood out of a stone.

I really feel that we should have gone the same way as the UK and stayed on our own. The Senior bondholders are mostly based outside of Ireland and they are the people who we are 'paying back'.

Emigration, here I come!

Just wait until they hit 5% and above over the next few years!

That will be many repossessions and worthless houses when that happens, Aristotle!

This rate increase is nominal, by itself it won't impact hugely on most people. Question is, added to all the other problems, wage cuts, price rises, negative equity, a trend of rising rates will be more and more significant.

The problem is the bailout deal, not the mortgage rate. This increase would have little or no impact if people were not already stretched by the bailout costs having to be covered by Irish residents.

I agree the rate increase is nominal, but if that meant 20 euro out of an already overstretched budget, it may as well be 2000 euro!

if the Irish (and Spanish) didn't always live for today and the quick buck by always going for cheap variable rather than fixed as is the case in most of Europe, then this would not be an issue. It is no coincidence that the 2 countries with most dramatic property crashes are the ones most fond of ECB tracker mortgages. A serious re-think has to be given to the mortgage market in Ireland. Problem is that the attitude of both the public and the political establishment is that margins on Mortgages should always be somewhere around 1% courtesy of the insane ECB tracker mortgage competition that took place from 2002 - 2008.

Having a more prudent mix of long-term vs short-term funding would mean that Irish banks should be looking at mortgage margins of around 3% to just cover costs of term funding, let alone make profits (tier1 capital) to retain against future expected losses on defaults.

For the moment, every tax payer is going to subsidise the ever-increasing legions of mortgage holders in arrears (10% and counting). As long the Government has a political strangle-hold over banks going through repossession process, it's a free bet for anyone with a mortgage to go into arrears. Why would anyone want to keep up to date with a mortgage when there is no surcharge interest payable, pressure to pay is kept to a minimum and reposssession process has to wait 12-24months?

For the moment, every tax payer is going to subsidise the ever-increasing legions of mortgage holders in arrears (10% and counting). As long the Government has a political strangle-hold over banks going through repossession process, it's a free bet for anyone with a mortgage to go into arrears.

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Another "Blame the government" post.

Why would anyone want to keep up to date with a mortgage when there is no surcharge interest payable, pressure to pay is kept to a minimum and reposssession process has to wait 12-24months?

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What about having a sense of responsibility and ethics? That's my reason anyway for keeping up the payments on my mortgage.

Would you deliberately default just because you could?

callybags said:

Another "Blame the government" post.



What about having a sense of responsibility and ethics? That's my reason anyway for keeping up the payments on my mortgage.

Would you deliberately default just because you could?

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Not really blaming - govt - its a reality.

These are hypothetical questions, and of course I agree with your comments about defaulting, however - the point remains that it does make it easier to make the decision to go into arrears than in other efficient markets.