BOI finance chief expects mortgage rates to start rising

Sarenco

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Bank of Ireland’s chief financial officer Andrew Keating expects Irish mortgage interest rates, which have fallen in the past five years, to start increasing again from here on – even though he believes the European Central Bank (ECB) may hold its main rate at zero until 2022.

Mr Keating said this was due to the increased amount of expensive shareholders’ money, or capital, that Irish banks have to hold in reserve against mortgages. This is required because of the scale of the mortgage arrears crisis in the Republic in the wake of the 2008 crash.

https://www.irishtimes.com/business/financial-services/bank-of-ireland-calls-time-on-irish-mortgage-rates-cuts-1.3804737?mode=sample&auth-failed=1&pw-origin=https://www.irishtimes.com/business/financial-services/bank-of-ireland-calls-time-on-irish-mortgage-rates-cuts-1.3804737
 

Sarenco

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There's a slide on their results presentation (page 52) that shows the RWA levels for Irish Vs other countries for residential mortgages.
That's a pretty stark graph.

It's disappointing to see that BOI's RWA actually materially increased last year. Our appalling default rates certainly have a long tail.:(
 

e_drizzel

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Is there evidence for those claims of the potential increased ECB rates in 2022 being priced into bond deals already and a higher cost of capital for longer-term lending?
 
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