Competition Authority Publishes Mortgage Market Report

I am working my way through it.

There is no sign whatsoever of any informed analysis or independent thought. It's primarily a summary of what they got in the submissions to the consultation paper.

A big concern is the "tracker time bomb" which might put tracker rates up from 0.6% today to 3.5% in a few years. But limited concern about the thousands who are paying between 3.1% and 4.5% now. Mad stuff.

Brendan
 
OK, I have at last found something useful in the report. But you will have to get as far as Page 63 to find it.

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4.26
It should be noted, however, that there is an important distinction to be made
between the influence on pricing that arrears have for an existing lender and the
credit risk that a new lender would face in the current macro-prudential
environment. The strict LTV and LTI limits imposed by the CBI are aimed at
reducing, significantly, the capacity of lenders to adopt credit risk on individual
loans
. As a result, a new entrant in the Irish mortgage market would find itself
in a benign pricing environment where risks on newly originated loans have
reduced significantly. Ensuring therefore that there are no disproportionate
barriers to entry is crucial to improving competition to bring about reductions in
mortgage interest rates. One of the most significant barriers for new entrants is
the failure, thus far, to adequately deal with NPLs which brings with it
expectations that any future crisis will result in a similar outcome for lenders. It
is important therefore that policymakers design and implement in the
immediate term a set of consistent and transparent policies for resolving NPLs.
97
 
The Irish Times focused on the CCPC's calls for a more effective repossession regime in their report:-

"The State’s competition watchdog has called for more effective home repossessions regime in Ireland under a series of recommendations to encourage new players into the country’s “dysfunctional” mortgage market.

In a report by the Competition and Consumer Protection Commission (CCPC) on options to shake up the mortgage market, the authority said that the restrictions in Ireland on lenders being able to “possess loan security” in the event of a mortgage default has the effect of raising loan rates for the wider market.

“Objectively, the scale of non-performing loans in Ireland is high relative to European peers and the number of loans in arrears over 720 days is exceptionally high. Despite this, repossessions are very low,” it said.

The 158-page report noted that the repossession rate in Ireland was 0.7 per cent as of last year, compared to 1.7 per cent in the UK, despite the fact that mortgage arrears on the other side of the Irish Sea is at its lowest level since 1994. Data published by the Central Bank last week showed that 10 per cent of owner-occupier loans remained in arrears at the end of March in Ireland, despite years of restructuring and forbearance by the banks."

http://www.irishtimes.com/business/financial-services/competition-watchdog-calls-more-effective-home-repossessions-1.3120898

I think it's encouraging to see that the CCPC are expressly highlighting the connection between high mortgage rates and the ongoing restrictions on the ability of lenders to enforce their security interests in an efficient and timely fashion.

While it may be stating the obvious, it is frustrating to continually hear politicians repeat the "keep families in their homes" mantra while simultaneously calling for lower mortgage rates.
 
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