ECB ups rate by 0.75%

Perhaps money on deposit might start earning something other than paltry amounts now.
 
It seems that so far, after the ECB increased rates twice, from 0% to 0.50% and now to 1.25%, the three large banks here (AIB, BoI, pTSB) have not increased variable mortgage rates at all?

www.rte.ie

No change in BoI, AIB and PTSB variable rates on hike

After today's announcement by the European Central Bank of a 0.75% interest rate increase, Bank of Ireland said its tracker mortgage rates will increase for all tracker mortgage customers by 0.75%.
www.rte.ie www.rte.ie

I am surprised.
 
I'd be amazed if they don't start to increase their Standard Variable Rates on their mortgages, in the weeks ahead... Otherwise, it'll eat into their margins, significantly.
 
MrEarl said:
I'd be amazed if they don't start to increase their Standard Variable Rates on their mortgages,
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I have covered this before in the media.

The Irish mortgage market is completely dysfunctional.

The variable rates are much higher than the fixed rates. They are used by all the banks, with the possible exception of AIB, to catch out customers coming off fixed rates who are too busy or to lazy to review the rate they are on and they end up on rates as high as 4.5% variable.

Irish banks should be reducing their variable rates, not increasing them.

Brendan
 
Okay, to be honest, I posted without checking what the actual SVR are.

I see what you mean by disfunctional.

ECB up +1.25% and no movement so far on SVR.

SVR must be a small part of overall mortgage books?

What are typical SVRs? 3.5%?
 
Protocol said:
Okay, to be honest, I posted without checking what the actual SVR are.

I see what you mean by disfunctional.

ECB up +1.25% and no movement so far on SVR.

SVR must be a small part of overall mortgage books?

What are typical SVRs? 3.5%?
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ECB increase kicks in Sept 14th so give it a week or two to see any shifting from lenders on fixed or SVR
 
Protocol said:
SVR must be a small part of overall mortgage books?
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Trackers account for 30% of the Irish market and I can't see most of the rest being on fixed rates so I presume SVR's are the biggest chunk of the market.
 
Will fixed rates go up? Applying for a switcher and am looking at Havens 4 year green at 2% or AIB 5 year green at 2.15%......wont be as attractive if .75% added onto them.
 
toby2111 said:
Will fixed rates go up? Applying for a switcher and am looking at Havens 4 year green at 2% or AIB 5 year green at 2.15%......wont be as attractive if .75% added onto them.
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Unlike variable rates, fixed rate pricing is more complicated and tends to lean more towards where it is believed rates are likely to go in the future. So fixed rates might not rise by 0.75% straight away as a result of yesterday's ECB decision.

That said, popular belief is that rates are likely to go up again from here so I'd expect fixed rates to go up soon anyway.
 
Protocol said:
SVR must be a small part of overall mortgage books?
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At the end of June SVRs were still at €14bn or 18% of Irish lenders' books! Some of these are people on restructured mortgages but there are many people who are either too lazy or ignorant to switch to a fixed rate which is almost certainly better value. Average variable rate is 3.5% according to the Central Bank, compared to about 2.75% across fixed rates.


There is probably close to hundred million annually on the table for people who call up their lender and ask to move off their variable rate.

Variable accounts for 9% of new lending as well which completely stumps me as well. In what circumstances is a fixed rate not your best option?
 
NoRegretsCoyote said:
Variable accounts for 9% of new lending as well which completely stumps me as well. In what circumstances is a fixed rate not your best option?
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It might make sense in circumstances where somebody is trading up and intends to discharge the mortgage in short order from the proceeds of a pending house sale.
 
With EU inflation at ~9% Real rates are lower now with the nominal base rate at 1.25% than they were when base rates were at 0%.
 
NoRegretsCoyote said:
At the end of June SVRs were still at €14bn or 18% of Irish lenders' books! Some of these are people on restructured mortgages but there are many people who are either too lazy or ignorant to switch to a fixed rate which is almost certainly better value. Average variable rate is 3.5% according to the Central Bank, compared to about 2.75% across fixed rates.


There is probably close to hundred million annually on the table for people who call up their lender and ask to move off their variable rate.
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An interesting example of inertia / consumer behaviour / psychology.

I'm sure somebody in the ESRI / Central Bank has done a study of this.

100 million euro.................
 
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