pardon my ignorance but all this about fixed interest rates being increased and people being forced onto variable rates, is this right? we are being screwed left right and centre, what do they want? how can they take anymore from people that dont have it? have the govt no control over this? all this IMF talk, what are they doing about the ordinary people that cant pay their mortgages?
has the govt no control over the banks or what?
- Thread starter kim
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Moved from Mortgage arrears, personal debt & negative equity to LOS.
If a person signs up to a variable rate mortgage, yes rates can increase.
We knew in 2005 that rates would increase, well anyone who was clued in and listened to national radio
What do you want OP? Rates kept low compared to ECB rates to subsidize home owners on low rates while the bank loses money
If you sign up to variable rates you take the low with the high and it can go a lot higher then now
We knew in 2005 that rates would increase, well anyone who was clued in and listened to national radio
What do you want OP? Rates kept low compared to ECB rates to subsidize home owners on low rates while the bank loses money
If you sign up to variable rates you take the low with the high and it can go a lot higher then now
rustbucket
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Really? Any chance you could lend me your Crystal ball?
The_Banker
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Really? So if someone just went about there daily business, got on with there days work and didnt analyse the news (at an economic level) then they deserve the penal rates they are getting.
Also, which I think is the OP point (though I may be wrong) the fixed rates have now become unbearable for someone who may be coming off them in the next 6 months so they will opt to stay on variable. Once on variable they are at the whim of any bank who wants to up rates.
People are caught no matter what way they turn. I think that is the point the OP is making and I agree with him/her.
People got used to never to be repeated super duper low rates due to the lifetime anomaly of joining a new currency where the biggest countries were in recession at a time we were booming like never seen before in history.
Rates are returning to normal. No where near penal.
<4% is a super duper rate.
4-6% is a low rate
6-7% is a normal rate.
7-9% us a high rate.
9%+ is a penal rate.
I'm getting really tired of all the cribbing and moaning by people as rates return to NORMAL.
I lived here through the eighties and the nineties and saw Commercial rates climb to 22%, so I can appreciate where you are coming from.
I also happen to agree with the OP.
All the bluster from the banks about "having to put up rates or lose money" is just that - a blowhards excuse for financially abusing people who have no alternative.
It has been apparent for many years that banking is run like a cartel, with little or no competition and a lot of hand-wringing from these shylocks when the interest rates go up.
Just like the oil prices, whenever it looks like market forces are actually doing what they are supposed to be doing - increasing competition and reducing costs - there is some convenient reason for pitting prices up
The essence of the bankers' crimes against humanity is that when they have broken a country or a people they use chasing profits as an excuse for beggaring families.
On top of their recent reckless economic treason and forelock-tugging bailouts this is just too much to bear - I think people should get out on the streets and make them realise they need to help their customers get through this - not screw them.
These are not profitable, well run institutions - we own them, they owe us a living and they have no right to beggar people they - along with the squeaky clean estate agents we never seem to hear about - lured into spending money they could not afford.
Banks and estate agents had a duty to advise people properly - as in wisely and well - they failed to do so to any real degree and its they and not the man on the 46A bus who should be paying through the nose for this crisis.
Let the argument advanced above for a return to higher fees be turned on its head - were the consequence of a bubble not foreseeable by professional bankers and valuers?
Yes they were - and returning to the high inflation days of the 1980's simply cannot and will not be borne this time.
Do the people pulling strings just assume that people will remain law-abiding when their homes are taken from them?
You're taking about anarchy - and a lot of the people who will bring this down will suffer this time.
ONQ.
My understanding of this, based on what I hear and read in the media, is that the banks are losing money on these loans. Whereas they were once funded by low interest deposits from overseas, they are now funded by higher rate inter-bank and money market loans.
If the banks continue to lose money on these loans, then who is going to cover their losses ? Yup, you and me and the rest of the tax base.
I saw Aonghus O'Snodaigh on the news last night looking for the banks to be nationalised. Maybe he doesn't read the business section of An Phoblacht
!
If the banks continue to lose money on these loans, then who is going to cover their losses ? Yup, you and me and the rest of the tax base.
I saw Aonghus O'Snodaigh on the news last night looking for the banks to be nationalised. Maybe he doesn't read the business section of An Phoblacht
!The_Banker
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No defender of Sinn Fein here but I assume when he talking about nationalising banks he means that when banks are owned by the Government that the Government actually start directing the banks policies. As it stands Anglo, EBS and AIB are government owned. Yet you have the laughable situation where the Irish Government own Anglo Irish, saved the bank from implosion and yet it can’t get into the files of the bank because they are encrypted.
On top that there are a number of Financial Institutions which provide mortgages to Ireland that are not nationalised PTSB being one, and a number sub prime companies who have ceased new business but are still threatening to take homes from people. Banks in the media are talking about using a velvet glove when dealing with people in arrears but in reality they are using an iron fist.
Thankfully, I am not in a bad situation financially but I have friends and relations who cannot sleep at night due to fear of losing their home. Its very easy to say, “well you should have thought about that when you borrowed all that money” but the reality is that banks were throwing money at people who wanted a home.
Meanwhile, the people in charge of those banks have sailed off into the sunset with massive pensions and not a care in the world. In any other country they would be before a judge and a jury of their peers.
There seems to be a distinct lack of empathy among some posters here for people who may be in financial trouble. Im not a religious person but “There by the grace of God go I”
On top that there are a number of Financial Institutions which provide mortgages to Ireland that are not nationalised PTSB being one, and a number sub prime companies who have ceased new business but are still threatening to take homes from people. Banks in the media are talking about using a velvet glove when dealing with people in arrears but in reality they are using an iron fist.
Thankfully, I am not in a bad situation financially but I have friends and relations who cannot sleep at night due to fear of losing their home. Its very easy to say, “well you should have thought about that when you borrowed all that money” but the reality is that banks were throwing money at people who wanted a home.
Meanwhile, the people in charge of those banks have sailed off into the sunset with massive pensions and not a care in the world. In any other country they would be before a judge and a jury of their peers.
There seems to be a distinct lack of empathy among some posters here for people who may be in financial trouble. Im not a religious person but “There by the grace of God go I”
rustbucket
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I fully understand the banks excuses as to why they are raising interest rates (In so far as I understand what they are saying).
However, I fail to see how increasing intra bank and inter bank lending rates should so drastically affect the rate a person pays on an existing mortgage.
If I borrow €10K at an agreed rate from you I expect to pay back the €10K over an agreed period of time at an agreed rate (or agreed reasonable rate of fluctation).
If you then go and borrow money from someone else at a higher rate does that give you the right to dramatically increase the rate you have already lent to me?
I know that the above is very basic and this is where fixed rates come in etc.
The banks areguement is that they are losing money because of all these trackers. My question is then, were trackers ever profitable for the banks?
If you relate my simplistic view above to the currrent situation, surely the money that people borrowed on trackers has already been borrowed? (And already been borrowed by the bank at an intra/inter bank rate). So, how can they be losing money.
Does the increase cost of Financing for the banks not just apply to borrowing at that point?
How is the Intra bank/Inter bank rate affecting variable rates on personal loans?
And if not, how was this issue regarding trackers not foreseen by ANYONE with half a brain in the banks or the financial regulator. I mean was anyone running any kind of Risk on these before they were offered?
My own situation is bleak. Am currently starting 2nd year of 2 year fixed at 2.85%.
Cant break it to refix for 5 now. God knows what the variable will be next year or the fixed rates when I come off. I will probably end up jumping from 2.85 to around 6 or 7%.
Coupled with increased taxes, reduced wages, reduced hours, and no prospect of a Full time job for a few years its a bitter pill to swallow.
But I know there is nothing we can really do about it
However, I fail to see how increasing intra bank and inter bank lending rates should so drastically affect the rate a person pays on an existing mortgage.
If I borrow €10K at an agreed rate from you I expect to pay back the €10K over an agreed period of time at an agreed rate (or agreed reasonable rate of fluctation).
If you then go and borrow money from someone else at a higher rate does that give you the right to dramatically increase the rate you have already lent to me?
I know that the above is very basic and this is where fixed rates come in etc.
The banks areguement is that they are losing money because of all these trackers. My question is then, were trackers ever profitable for the banks?
If you relate my simplistic view above to the currrent situation, surely the money that people borrowed on trackers has already been borrowed? (And already been borrowed by the bank at an intra/inter bank rate). So, how can they be losing money.
Does the increase cost of Financing for the banks not just apply to borrowing at that point?
How is the Intra bank/Inter bank rate affecting variable rates on personal loans?
And if not, how was this issue regarding trackers not foreseen by ANYONE with half a brain in the banks or the financial regulator. I mean was anyone running any kind of Risk on these before they were offered?
My own situation is bleak. Am currently starting 2nd year of 2 year fixed at 2.85%.
Cant break it to refix for 5 now. God knows what the variable will be next year or the fixed rates when I come off. I will probably end up jumping from 2.85 to around 6 or 7%.
Coupled with increased taxes, reduced wages, reduced hours, and no prospect of a Full time job for a few years its a bitter pill to swallow.
But I know there is nothing we can really do about it
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Bank models are built on lending long term but borrowing short term. They are constantly borrowing money to fund your 30 year mortgage for example.
Trackers were profitable for banks when Euribor (inter-bank borrowing cost) was a couple of basis points above the ECB rate and there was plenty of liquidity. That's changed so the banks are having to pay a fortune to borrow money to fund their loan books and therefore they are losing money.
As Sunny already mentioned banks lend for long periods of time, but the funds they need to do this are borrowed for short periods of time.
I hope this doesn't sound a bit harsh, but are you not applying double standards here? You are first saying that the risks with tracker mortgages should have been foreseen or better accounted for. But your own situations is very much the same, you started on a low rate which was affordable at the time, but don't seem to have taken account for future rises in rates.
The_Banker
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You forget one point. The banks are being bailed out because they didnt take risk into account.
What bailout is there for someone who is jumping from 2.85% to 6% or 7%?? Especially when you consider the mortgage holder is paying more tax to bail out the bank who gave him the mortgage in the first place.
rustbucket
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No, not harsh at all. Im not saying I didnt take into account rate rises at some point. I just didnt take into account such an increase over a short period of time. Its just something im going to have to take on the chin, hopefully
I agree, but bailing out the banks was a terrible mistake, and will not result in any less risk being taken by banks in the future. If anything this massive explicit bailout will signal to banks in the future that no matter how bad they mess up, the government will step in. The next generation is not only being punished through having to cough up for mistakes made in the past, but they will also be punished through the precedence set by the bailout.
A lot of people were blinded by long periods of very low interest rates. As robd posted earlier, anything under 5% or 6% is very low, and central bank rates should never have fallen so low.