Low rate of repossessions linked to higher mortgages
Borrowers pay price for low repossessions and State control of banks, ESRI says...
...However, Spain, which experienced a similar boom and bust to Ireland in recent times, has one of the lowest average rates in Europe, at 1.7 per cent. One of the reasons was that it was comparatively easier to repossess properties when loans were in default in Spain than elsewhere, said Kieran McQuinn, associate research professor at the ESRI.
“If it’s more difficult for banks to repossess properties and repossess distressed loans, on average, [banks] tend to price this into their credit risk and that overall leads to higher interest rates on average,” said Mr McQuinn....
....The Government’s continued involvement in the banking sector following the financial crisis, and Fianna Fáil’s successful initiation last month of a Bill to give the Central Bank powers to cap variable home loan rates, were damaging competition and contributing to higher mortgage costs, Mr McQuinn said....
...“But the point we’re making is that because Irish firms and Irish households are facing higher interest rates in the market, there’s also potentially a cost associated with that State involvement which maybe people aren’t focusing on.”
"While the average interest rates on new Irish variable rate mortgages fell to 2.7 per cent in March from almost 3.5 per cent a year earlier, this remains well above the euro-area average of 1.9 per cent, according to the ESRI.
However, Spain, which experienced a similar boom and bust to Ireland in recent times, has one of the lowest average rates in Europe, at 1.7 per cent. One of the reasons was that it was comparatively easier to repossess properties when loans were in default in Spain than elsewhere, said Kieran McQuinn, associate research professor at the ESRI.
That chart is wrong - the figure for Ireland to end-March should be 3.16% and not 2.7%.
That chart is wrong - the figure for Ireland to end-March should be 3.16% and not 2.7%.
He seems to be taking it from here
[broken link removed]
You are of course right, assuming that you include trackers issued at 0.5% in 2006 as new business issued in 2016.
Sarenco,
Are we being rolled over? again ?
That chart is wrong - the figure for Ireland to end-March should be 3.16% and not 2.7%
Loans that are restructured at rates that would not be offered to a similar customer seeking a new loan are excluded from the MIR data
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