IdesofMarch
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I'm looking forward to your thesis on why?This is not the case.
I'm looking forward to your thesis on why?
Average rates charged on all outstanding Irish mortgages are actually bang in line with the Eurozone average.
Bear in mind that almost half of all outstanding Irish mortgages are low margin trackers.
That's pretty incredible, IMO, when you consider our extraordinarily high level of NPLs.
Sarenco’s right...there’s no grand conspiracy; rates for new mortgages are high, but average rates are fine when existing trackers are taken into account.
In addition, it’s hard to repossess a property in Ireland.
And there little prospect of new entrants, probably because it’s difficult to repossess and because political interference hangs over mortgage lending like Damocles’ sword.
Nobody is disputing the fact that rates offered on new home loans in Ireland (excluding renegotiations) are significantly higher than the Eurozone average (3.18% versus 1.8%).Average variable interest rate for new mortgages in Ireland is 3.48%
Average variable interest rate for new mortgages in the Eurozone is 1.80%
Nobody is disputing the fact that rates offered on new home loans in Ireland (excluding renegotiations) are significantly higher than the Eurozone average (3.18% versus 1.8%).
https://www.centralbank.ie/docs/def..._retail_interest_rate_statistics.pdf?sfvrsn=4
This statistic exaggerates the differential somewhat as loan arrangement fees (often 1-2% of the sum advanced) are the norm in most Eurozone States, whereas cash backs are commonplace here.
In any event, average rates on all outstanding variable rate mortgages in Ireland are pretty much bang in line with the comparable Eurozone figure, which means your thread title is misleading.
If I went into a bank in Ireland tomorrow and got a variable interest rate mortgage, the chances are, my mortgage interest rate would be on average 82% higher than my fellow European borrowers of similar circumstances. Why is that?
First off, your 82% figure is nonsense.If I went into a bank in Ireland tomorrow and got a variable interest rate mortgage, the chances are, my mortgage interest rate would be on average 82% higher than my fellow European borrowers of similar circumstances. Why is that?
As has been stated multiple times, it’s because banks have lost cost trackers on their books, there is a lack of competition, and it’s harder to enforce security in Ireland relative to other jurisdictions.
First off, your 82% figure is nonsense.
The weighted average rate charged on new home loans (excluding renegotions) is around 43% higher than the equivalent Eurozone figure. If you allow for arrangement fees and cash backs, the effective cost of finance is closer again.
The primary reason why rates on new home loans are higher in Ireland than the Eurozone average is primarily down to our exceptionally high level of non-performing loans. That has a direct impact on the amount of capital that a lender has to reserve for each new loan and on the cost of that capital.
The fact that almost half of their back books are low-margin trackers means that banks cannot spread these costs more evenly across all home loans.
Finally, our failure to deal with NPLs means that new entrants are discouraged, notwithstanding the relatively generous net interest margins currently available to the incumbent banks.
I've already provided a link to the Central Bank's latest retail interest rate statistics.Can you provide me with some statistical evidence to back up your claims ?
Gordon, let me correct you. Tracker mortgage products are not loss making
Secondly, difficulty with enforcing mortgages would only make up, at maximum, 15% of the interest rate differential between Eurozone variable rate mortgages and Irish variable rate mortgages
As has been stated multiple times, it’s because banks have lost cost trackers on their books, there is a lack of competition, and it’s harder to enforce security in Ireland relative to other jurisdictions.
I believe you said “lost cost trackers” you appear to be misrepresenting you own words!
All statistics are made up. That is the nature of statistics.
“Facts are stubborn, statistics are more pliable.”
Mark Twain
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