Upcoming ECB rate rises and consequences

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tonymac

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I see a good article in todays indo from the excellent Charlie Weston regarding upcoming rate rises and the consequences for trackers, fixed and variable rate holders. For starters i am certain that the banks here will screw variable holders again by raising those rates and we'll probably be told thats business just suck it up and take it, morally wrong but nothing can be done etc. At this point i feel it needs to be highlighted whats going on here as variable custimers didnt benefit from the low ECB rates and as soon as they start giing up again theyre screwed again. I for one will be getting in touch with Michael McGrath and local TDs in Dublin west to highlight this and ask him to raise this this as a good reason why banks here need closer inspection as theyve been abusing their position in the last number of years with the tracker mortgage rate scandal and this as prime examples. I would be interested in hearing from people including yourself Brendan regarding this matter but to emphasise im also aware our arguement is much weaker than the tracker one as the law was broken , ours is a moral one but a strong reason why Michael McGraths bill needs to go through and also to stop those gimmicky cash back offers.
 
Another point here about something being morally wrong etc is we were all morally wronged for me by the decision made not to burn bondholder as a result of ECB pressure etc back in the day and just like the SVRs nothing was done with that either.
 
Trust me sarenco i wont. Thats the one odessey06. All im trying to do here is get peoples thoughts on this whole issue especially from SVR and fixed people, trust me im delighted for people on trackers especially those who have recently got sorted adequately in the redress scheme.
 
Sarenco said:
Don't hold your breath...

Tis gas. Michael McGrath thinks by forcing the banks to get rid of the cashback offers that they will be forced to compete on rates. Michael, if the government of the country, if the owner of 71% of AIB bank, if the owner of 15% of BOI cannot force the banks to compete on rates, what the hell will getting rid of a few grand cashback do. One of the most stupidest proposals yet from Fianna FAIL.
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I dont think that the main objective for getting rid of cash back is to force the banks to compete on rates. That at most is a secondary objective.

The purpose of banning cash back offers is to stop the banks chipping away the Central Bank borrowing limits, and to stop them disguising the true cost of loans by offering upfront cash back.

If they are no longer able to disguise the cost of loans through cash back offers, potential borrowers will be in a better position to compare the offerings of the different banks. That is hoped to promote competition.
 
tonymac said:
excellent Charlie Weston
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That man is obsessed with interest rates and trackers. He writes about little else and it's the same old guff all the time.
Copy and paste.
Whats he saying now"interest rates will go up at some stage in the future" of course they will, they are at zero...
Change the record Charlie
 
Fair enough he has been writing about interest rates and trackers a lot but these are very important, relevant issues for a lot of people and the ttacker mortgage issue is one of the greatest scandals of the many financial scandals that have dogged this country down the years. He has also highlighted the SVR issue regularly which might only be morally wrong but disgraceful nonetheless and affects a lot of people which it will again when those people are subject to rate rises again soon despite not benefitting from the historically low rates of recent years. My hope here is that Charlie and criminal journalists will soon be writing about the bankers involved in these scandals and their jailing but of course thats wishful thinking on my part seeing as the bankers seem to be subject to a different set of laws to most people that doesnt involve being held to account for their actions.
 
My own sense is that the decrease in rates on foot of legislation and competition will be greater than any increases in rates by the ECB.

In other words, I believe that the short to medium term prospects for Irish mortgage holders are bright.
 
Personally I think all this stuff about interest rate increases is second guessing.
The ECB has to indicate that it sees interest rate rises on the horizon. If it didnt, it would be tantamount to admitting its QE program is failing.
For sure, very modest increases will probably occur, and over 3-4yrs, a 1% increase is extremely modest.
In reality, such an increase by 2021 is pitiful, considering the amount of money printing going on. A 1% rise in interest rates over 3-4yrs is probably the least you could expect in a growing (eurozone) economy, nevermind an economy that is propping up asset prices with free money.
I suspect the eurozone, and further afield, is caught in a deflationary trap in real terms. Take away artifical stimulus of QE and asset prices in bonds and property will fall. Stocks too. This needs to happen if the economy is to reflect true value.
The economic model of trickle "down" (up) wealth needs to be smashed. A good place to start would be to include the value of asset price increases in the inflation figures. This will jump the inflation rate, force up interest rates, induce a correction in asset prices, and engineer a transfer of wealth from capital to labour through wage demands.
The transfer will be economic hardship in the short-term, but in medium to long-term, real productivity increases will be rewarded through higher standards of living and wealth, rather than an increasing cycle of perpetual debt.
 
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