"High mortgage costs top list in FF's supply talks concern in talks"

Brendan Burgess

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If this is true, there might be some hope for action.

High mortgage costs top list in FF's supply talks concern in talks

The Bill to control rates passed its initial stages two years ago.

It should be an easy one for FG to agree to.


A senior Fianna Fail politician said the party will be focused on finding ways to reduce interest rates and helping people who are still in mortgage arrears once negotiations with Fine Gael begin this week.


...


Fianna Fail appointed the party's finance spokesman Michael McGrath, who has campaigned for lower mortgage rate, as one of its lead negotiators. Mr McGrath will be joined by Fianna Fail deputy leader Dara Calleary.
 
If this is true, there might be some hope for action.

High mortgage costs top list in FF's supply talks concern in talks

The Bill to control rates passed its initial stages two years ago.

It should be an easy one for FG to agree to.


A senior Fianna Fail politician said the party will be focused on finding ways to reduce interest rates and helping people who are still in mortgage arrears once negotiations with Fine Gael begin this week.


...


Fianna Fail appointed the party's finance spokesman Michael McGrath, who has campaigned for lower mortgage rate, as one of its lead negotiators. Mr McGrath will be joined by Fianna Fail deputy leader Dara Calleary.


One way to reduce the rates is speeding up the repossession process. While it is not the only reason for high rates it is not unrealistic to think that it is one of the reasons new competitors will not enter the market and hence force competition.
 
The Bill to control rates passed its initial stages two years ago
It seems odd to me that the article makes no mention of FF's price-fixing Bill.

Instead, FF will apparently "push for the introduction of measures which would bring about more competition in the banking sector".

Change of tack?
 
The Bill to control rates passed its initial stages two years ago.

It should be an easy one for FG to agree to

This Bill is still at the Committee stage with 8 more stages to go.

The draft has been roundly criticized by the ECB.

Its progress will not be without difficulty.
 
If Banks cannot repossess property where the “owners” can’t or won’t keep up repayments, that surely contributes (significantly?) to higher mortgage interest rates. I heard Lisa Chambers on the radio this morning advocating that Banks be forced to reduce rates but when asked if FF would support moves to ease repossessions she was against it. Typical political double-speak.
 
Who has a mortgage? People who get up early in the morning. Who have FG not looked after? People who get up early in the morning. FF trying to pick off some FG voters. The sad thing is, FF have no idea why interest rates are high. Or if they do, they've no intention of being honest about it with the public
 
If this is true, there might be some hope for action.

High mortgage costs top list in FF's supply talks concern in talks

@Brendan Burgess when I first got involved in this discussion ~2014 on this site, the interest rates were stubbornly holding above 4% with the european average less than half of that figure. There was limited scope to switch, and many banks would not allow their customer lower rates by fixing. A reasonable number of people were still in negative/low equity, and many were still feeling the aftershocks of the bust period and financially on poor grounds. Unemployment was still above 10%. Even if you wanted/were able to switch, it was very difficult to get a rate below 4%.

Roll on 4 years, the landscape has changed quite dramatically. It is now possible to get rates as 2.3%. The majority of people are out of negative equity/low equity and are in a much better position to switch if they choose to do so. Most banks encourage customers to switch to avail of better rates, and most allow those on fixed mortgages to overpay by a reasonable amount. I accept that variable rates may not be as competitive as we would like, but its pretty easy (in general) to break a fixed rate at the moment for most banks.

So what action are FF looking to achieve here? Going back to a discussion we had a number of times - if people are in a position to switch and choose not to do so, then that is ultimately their business. There is nothing that any legislation can do to force them or banks to do so.

I do agree that those who cannot switch need some level of protection, although one could legitimately argue that if you are unable to switch currently you could be seen as a higher risk profile and therefore should be paying a premium on your mortgage than someone who can switch. I would still like to see some level of protection here however.

As you know, my attitude on this one has softened over the last 4 years, as rates have come down much closer to european levels and customers have not acted accordingly, for whatever reason. 4 years ago, I was screaming for new banks to enter the market. Now, I am honestly not sure it would make a difference to the vast majority of mortgage holders.

The sad thing is, FF have no idea why interest rates are high. Or if they do, they've no intention of being honest about it with the public
Back when interest rates were 4% plus, the reason they were so high was the banks needed capitalisation and return to profitability, with trapped variable mortgage holders were an easy target.
Now with interest rates floating around 2.5%, the difference could possibility be linked to (a) increased regulation in the space, (b) levels and costs of repossessions, (c) provisions for future bad debt writedowns and (d) the size of the market but being able to benefit of economies of scale. Another challenge is Ireland appears to love its cashback without the 'tie in period', whereas european's have arrangement fees in general. Its also worth noting that very few European mortgages would be given at 90% LTV and 3.5 times salary.

But we want to have our cake and eat it... and our political parties know this and pander to our wishes !
 
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