Brendan Burgess
Founder
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Here is his Kilkenny speech.. at around 31.40 he says the following
So if they are paying 2.5% interest only now, then they have monthly repayments of €2,000 a month. Some solicitors, especially those in conveyancing, are suffering. But many others still have good incomes. When the ECB rates rise, these guys will get into further difficulty, but their loans will still be very cheap.
Around 7% of borrowers are in arrears. I would say that the figure must be lower for those on interest only mortgages. But even if you say that 10% of these high-rollers will eventually default, it means that around €1 billion of mortgages will default. The bank will lose around 50% on these, so it’s a €500m problem for the banks. A serious problem, but small in relation to the rest of the banks’ problems. The taxpayer probably owns about 50% of the market, so the taxpayers’ problem is around €250m. And this has been provided for in full at the last stress test and recapitalisation exercise.
A much bigger problem for the banks is that they have tied up €11 billion in cheap tracker mortgages. Default is a small problem by comparison.
I very much doubt that there were 10,000 loans of €1 million given out. But let’s say that there were. At the peak of the market, these guys were borrowing at between 0.5% and 1% above ECB.
So if they are paying 2.5% interest only now, then they have monthly repayments of €2,000 a month. Some solicitors, especially those in conveyancing, are suffering. But many others still have good incomes. When the ECB rates rise, these guys will get into further difficulty, but their loans will still be very cheap.
Around 7% of borrowers are in arrears. I would say that the figure must be lower for those on interest only mortgages. But even if you say that 10% of these high-rollers will eventually default, it means that around €1 billion of mortgages will default. The bank will lose around 50% on these, so it’s a €500m problem for the banks. A serious problem, but small in relation to the rest of the banks’ problems. The taxpayer probably owns about 50% of the market, so the taxpayers’ problem is around €250m. And this has been provided for in full at the last stress test and recapitalisation exercise.
A much bigger problem for the banks is that they have tied up €11 billion in cheap tracker mortgages. Default is a small problem by comparison.