ESRI "People who don't have cancer more vulnerable than those who have cancer already"

NoRegretsCoyote

Frequent Poster
Messages
918
A 50 basis point rise leads to a 0.4 percentage point increase in the flows of new arrears for borrowers with tracker mortgages, compared to a 0.2 percentage point increase for those households with SVRs.

I don't know what the flow of new arrears is now for tracker mortgages. Let's say it's 1%. I very much doubt that an increase in the ECB rate of 0.5% would lead to it rising to 1.4%.
This is almost certainly down to the demographics (size of outstanding balance, income of households) of tracker households compared to SVR households, and barely due to the first-round impact of higher rates per se.
 

Brendan Burgess

Founder
Messages
38,704
Take an example of Johnny who took out a €300k mortgage in 2006 over 30 years at ECB +1%.

The ECB rate was 3% so the mortgage rate was 4% .

Since then he has paid an awful lot less than he was expecting, so he has probably saved a lot of this.

His mortgage balance today is probably around €200k with 17 years to go at 1% mortgage rate, so his repayments are down to €1,066.

If the ECB raises the rate from 0% to 2%, which even the ESRI say is unlikely, his repayments will rise to €1,252

Summary

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He has probably progressed in his career since then.

Conclusion: Tracker mortgage holders are not vulnerable.



Brendan
 
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Bronte

Frequent Poster
Messages
13,699
Hi Bronte

Are you suggesting that the ESRI report has more authority than my analysis because of this: :)

View attachment 3497
Far be it from me to suggest that such reports are justification of one's jobs.

Or
Far be it from
me to suggest such reports are written in a way so that

- most ordinary people will not read them
- most will not understand them
- most will think it's highfluting stuff that's best left to the experts.

Would you happen to know what 'laggered level' of anything means.....
 

RETIRED2017

Frequent Poster
Messages
770
A 50 basis point rise leads to a 0.4 percentage point increase in the flows of new arrears for borrowers with tracker mortgages, compared to a 0.2 percentage point increase for those households with SVRs.

I don't know what the flow of new arrears is now for tracker mortgages. Let's say it's 1%. I very much doubt that an increase in the ECB rate of 0.5% would lead to it rising to 1.4%.

Those on tracker mortgages can comfortably handle an increase in the ECB rate.

Brendan
Out of interest do you know the % of trackers who defaulted, since 2008,I know of tracker mortgages where the amount advanced even today are higher than they would get after setting off redress and compensation , are still higher than they amount the could borrow as of today,homes may be in positive equity but are just about making full repayments,
 
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