ECB cuts rate to 1.25%

Rabidlamb

Didn't take that new chap long.
I'm hoping it'll be down to 1% before Christmas.
What chance any of this being passed on to variables :rolleyes: ?

http://www.rte.ie/news/2011/1103/ecb-business.html

average_runner

Woohoo cut on my tracker.

Extra money to pay mortage off that bit quicker.

seamus

Oh sweet. tracker mortgages.

Very quick move though by the new guy. He's obviously been formulating his own plans in the background for a while now and is eager to implement them.

n97 mini

0.25% saves me €9 a month on the mortgage. Woohoo!

bamboozle

great news, here's hoping for another drop in December!

fliball123

lets hope they pass it on to struggling variable rate mortgage holders

Frank Black

fliball123 wrote: »

lets hope they pass it on to struggling variable rate mortgage holders

Or alternatively, we could be more realistic and accept that they won't.

andrew

It's unusual; Usually new Central bankers raise rates, to show that they're committed to low inflation (especially in the ECB).

Suryavarman

andrew wrote: »

It's unusual; Usually new Central bankers raise rates, to show that they're committed to low inflation (especially in the ECB).

These are unusual times though. With many countries leaning towards recession and the markets being rather volatile, the Central Bank will want to lower interest rates in the hope that cheaper credit will improve things.

Madd Finn

fliball123 wrote: »

lets hope they pass it on to struggling variable rate mortgage holders

In your dreams! We'll be subsidising those tracker bustards for some time to come!:mad:

irishh_bob

woo hoo , interest rate cut means a rise in gold price

WebGeek

black francis wrote: »

Or alternatively, we could be more realistic and accept that they won't.

Of course not -someone has to subsidize the trackers - so why not the ones who bought at the top of the boom and never got the chance to trade up from starter homes or get a tracker. Burden sharing anyone? - didn't think so.*Que moral police replies*

KELTICKNIGHTT

Be curious to see what banks pass it on.

woodoo

The banks may act up on this and call Elderfields bluff.

KELTICKNIGHTT

Think tsb only bank so far to say they would pass it on this month
Other banks will likely be slow to ,even mightened till next ecb rate drop.
Any drop in my mortgage is good.

Welease

WebGeek wrote: »

Of course not -someone has to subsidize the trackers - so why not the ones who bought at the top of the boom and never got the chance to trade up from starter homes or get a tracker. Burden sharing anyone? - didn't think so.*Que moral police replies*

Trackers were available well past the end of the boom... I picked up one in Dec 2007.

beertons

Crap. I applied for a mortgage today, with BOI.

thebman

beertons wrote: »

Crap. I applied for a mortgage today, with BOI.

Noonan ordered them all to do it or he'd get the financial regulator involved.

Presumably to shake their hands or get a free lunch on them or something :P

Anyway I'd expect the others to announce similar in the next few days, they each just want a headline each I imagine so will do it on separate days.

PTSB just got the early, free publicity on the matter making it look like they are the good guys.

johnnyskeleton

Does anyone else think that by Not passing this on to mortgage holders the banks would be acting in the best interests of the taxpayer?

No?

n97 mini

johnnyskeleton wrote: »

Does anyone else think that by Not passing this on to mortgage holders the banks would be acting in the best interests of the taxpayer?

No?

If what we're being told is true, then yes.

(We're being told that the banks are losing money on trackers, and need the margin on variable and fixed rate mortgages to cover the shortfall. We're also being told that we own AIB as well as a few other smaller institutions, and a large part of BoI)

Gumbo

WebGeek wrote: »

Of course not -someone has to subsidize the trackers - so why not the ones who bought at the top of the boom and never got the chance to trade up from starter homes or get a tracker. Burden sharing anyone? - didn't think so.*Que moral police replies*

I bought at the top of the hill in October 2006 and got a tracker from Bank Of scotland.

Tazz T

Well, the gov is saying they'll 'use their influence' to make sure the cut is passed on. Hope for a change this is not just rhetoric, cos they've done very little apart from break their electoral promises so far.

BTW, Madd Finn, I'm on a tracker and not a begrudger like you. I'm not subsidising your variable rate. The bank simply knows it can penalise you. You choose your service, you pay your price, matey! Don't blame me.

ardmacha

Interest rates for depositors exceed 3% and exceed 4% in many cases. This is more relevant than the ECB rate. Banks cannot lend it out for less than they take it in.

fliball123

Madd Finn wrote: »

In your dreams! We'll be subsidising those tracker bustards for some time to come!:mad:

This kinda uneducated stupid comment drives me mad...how is anyone else subsidising a person with a tracker...

For example..

If I have a tracker and I owe 100 Euros and I pay back this 100 Euros with what ever interest then its obvious that I am subsidising my own mortgage to the full amount and paying interest...Its not the tracker mortgagees fault you didnt avail of it at the time

thetonynator

ardmacha wrote: »

Interest rates for depositors exceed 3% and exceed 4% in many cases. This is more relevant than the ECB rate. Banks cannot lend it out for less than they take it in.

Except they can loan out far more than they have on deposit, so really 0.3 or 0.4% would cover the interest for depositors.

WalterMitty

thetonynator wrote: »

Except they can loan out far more than they have on deposit, so really 0.3 or 0.4% would cover the interest for depositors.

Not so much with increased capital requirements and high funding costs for their funds.

halkar

Nothing to get excited for. Government will take whatever saved and more in the budget :mad:

Welease

fliball123 wrote: »

This kinda uneducated stupid comment drives me mad...how is anyone else subsidising a person with a tracker...

For example..

If I have a tracker and I owe 100 Euros and I pay back this 100 Euros with what ever interest then its obvious that I am subsidising my own mortgage to the full amount and paying interest...Its not the tracker mortgagees fault you didnt avail of it at the time

Thats not exactly true.. The banks don't borrow (or use deposits for) your total 100 at the interest rate on the day you take out the loan.. they will revolve cash through the system througout the effective term of your loan, and may in some cases be charged far more interest on your loan (or pay far more for cash on deposit) than they are able to charge you on a tracker based mortgage.

KELTICKNIGHTT

Welease wrote: »

Thats not exactly true.. The banks don't borrow (or use deposits for) your total 100 at the interest rate on the day you take out the loan.. they will revolve cash through the system througout the effective term of your loan, and may in some cases be charged far more interest on your loan (or pay far more for cash on deposit) than they are able to charge you on a tracker based mortgage.

I'M on variable and with ulster bank who said they wouldn't be passing cut on

bbsrs

Tazz T wrote: »

BTW, Madd Finn, I'm on a tracker and not a begrudger like you. I'm not subsidising your variable rate. The bank simply knows it can penalise you. You choose your service, you pay your price, matey! Don't blame me.

Well said . @Madd Finn how can people blame those on trackers for the situation they find themselves in and if there were no trackers don't think for a minute your mortgage would be any cheaper, the small ammount banks loose on trackers is nothing compared to what their wreckless lending to investors and greed cost them . The percentage of losses they have from residential lending is very small in comparison. Be angry at the banks not the individuals who bought a home and took what they thought was the right option for them. If interest rates had gone up significantly would those on fixed rates have said aww the poor trackers are getting crucified lets all swop to trackers to help them out ?

johnnyskeleton

n97 mini wrote: »

If what we're being told is true, then yes.

(We're being told that the banks are losing money on trackers, and need the margin on variable and fixed rate mortgages to cover the shortfall. We're also being told that we own AIB as well as a few other smaller institutions, and a large part of BoI)

We know that the banks are losing money hand over fist. If they can reduce those losses somewhat by, for example, having higher interest rates, I see no problem with that. Every extra €1 the banks charge on loans is €1 less the taxpayer will have to pay the banks. In theory, anyway.

KELTICKNIGHTT

Think people are more interested in saving money ,so the more the ecb cuts interest rate,the better for people
The banks charge enough in charges etc.

johnnyskeleton

thetonynator wrote: »

Except they can loan out far more than they have on deposit, so really 0.3 or 0.4% would cover the interest for depositors.

This is a common misconception when people are given the basic theory on how fractional reserve banking works. It is sometimes explained that if I lend someone €10 and they know I only ever want €1 at a time, they can loan out the other €9 at interest, and if that person only ever wants €0.90 I can loan out the remaining €8.10. The original cash is a deposit, but each subsequent loan creates a new deposit and that is how the system ultimately lends several times the amount of cash it originally receives.

In simple terms, banks have to have assets (loans and cash to hand) and liabilities (deposits and other debts) in equal amounts. The central bank requires them to hold a certain percentage of cash relative to their deposits. So, basically for €100 in deposits they need to have €10 in cash and can loan up to €90.

Essentially, the bank can loan out far more than they have in cash (9 times in fact). But they have to have deposits to match each of these loans or it would not make sense. However, only a small percentage of this money has to be kept in physical cash.

woodoo

johnnyskeleton wrote: »

We know that the banks are losing money hand over fist. If they can reduce those losses somewhat by, for example, having higher interest rates, I see no problem with that. Every extra €1 the banks charge on loans is €1 less the taxpayer will have to pay the banks. In theory, anyway.

Do you have a tracker mortgage?

Head The Wall

average_runner wrote: »

Woohoo cut on my tracker.

Extra money to pay mortage off that bit quicker.

seamus wrote: »

Oh sweet. tracker mortgages.

Very quick move though by the new guy. He's obviously been formulating his own plans in the background for a while now and is eager to implement them.

n97 mini wrote: »

0.25% saves me €9 a month on the mortgage. Woohoo!

bamboozle wrote: »

great news, here's hoping for another drop in December!

There's nothing to be cheering about really, yes it's a cut in what you're paying but it's still an overpriced mortgage in the majority of cases.


Will any of ye save more than the people like myself who have been saving the last few years and will get a house at a lot cheaper price, I think not. I have something to be happy about

halkar

Head The Wall wrote: »

There's nothing to be cheering about really, yes it's a cut in what you're paying but it's still an overpriced mortgage in the majority of cases.


Will any of ye save more than the people like myself who have been saving the last few years and will get a house at a lot cheaper price, I think not. I have something to be happy about

Houses may be cheap now but getting mortgage is difficult. And you will never see interest rates anywhere near to trackers in your life time.

Head The Wall

Well considering I'll be looking for 50-70k over 10 years I reckon I'll be way better off in the long run. Six figure savings go a long way

bbsrs

Head The Wall wrote: »

Well considering I'll be looking for 50-70k over 10 years I reckon I'll be way better off in the long run. Six figure savings go a long way

And why do you fell the need to bore us with this information about your personal finances ?

SBWife

fliball123 wrote: »

This kinda uneducated stupid comment drives me mad...how is anyone else subsidising a person with a tracker...

For example..

If I have a tracker and I owe 100 Euros and I pay back this 100 Euros with what ever interest then its obvious that I am subsidising my own mortgage to the full amount and paying interest...Its not the tracker mortgagees fault you didnt avail of it at the time

Pot kettle black.

You are being subsidised if you have a tracker because the bank's cost of funds is higher than the interest rate you are being charged on your mortgage. The market for funds has changed in such a way that the margin above the ECB rate included in most tracker mortgage no longer covers the difference between the actual cost of funding for the banks and the ECB rate.

Head The Wall

bbsrs wrote: »

And why do you fell the need to bore us with this information about your personal finances ?

Oh, who's tetchy, mortgage holder? Other posters started it and I reckon its a pertinent point to be made in relation to the rate cuts and "savings" these posters have made.

The reality is the best savings a lot of people can make is to give up the overpriced houses they are and will struggle to pay for in the future. These rate cuts are only a bandaid solution as Ireland will not return to boom levels, the sooner people realise that the better.

Gumbo

Head The Wall wrote: »

Well considering I'll be looking for 50-70k over 10 years I reckon I'll be way better off in the long run. Six figure savings go a long way

higher interest rates at present, no trackers and count in the time it took you to save that money, there wont be much in the difference to be honest.

id like to see the calculations between the 2.

kippy

Any cut in interest rates is a benefit to the people effected by it so I ain't complaining however ultimately it's a sign of the absolute ****e the continent is in, small picture good, big picture terrible and that big picture will ultimately have more of an effect on every individual.

Head The Wall

kceire wrote: »

higher interest rates at present, no trackers and count in the time it took you to save that money, there wont be much in the difference to be honest.

id like to see the calculations between the 2.

You do know that you can earn interest on savings, it hasn't just been sitting in a current account it has been earning more for me.

Interest on a smaller sum will obviously be less as will being mortgage free in ten years as opposed to 30/40 years that was the norm here in the boom

There is also better value, house prices are down and still dropping.

Anyone that thinks I would have been better off buying during the boom as opposed to what I will be doing is intellectually challenged, no two ways about it.

bbsrs

Head The Wall wrote: »

You do know that you can earn interest on savings, it hasn't just been sitting in a current account it has been earning more for me.

Interest on a smaller sum will obviously be less as will being mortgage free in ten years as opposed to 30/40 years that was the norm here in the boom

There is also better value, house prices are down and still dropping.

Anyone that thinks I would have been better off buying during the boom as opposed to what I will be doing is intellectually challenged, no two ways about it.

Obviously you are better off buying now or in the next few years than in the boom .

fliball123

Welease wrote: »

Thats not exactly true.. The banks don't borrow (or use deposits for) your total 100 at the interest rate on the day you take out the loan.. they will revolve cash through the system througout the effective term of your loan, and may in some cases be charged far more interest on your loan (or pay far more for cash on deposit) than they are able to charge you on a tracker based mortgage.

I am sorry but borrowing or other loans or deposits do not come into this equation..Its a simple transaction aggreement where you get your loan and once you pay back the full amount and interest no one else is subsidising your loan.....If the banks are too caught up with other areas such as over borrowing themselves then thats the banks fault not the people who have tracker mortgages...It is true

fliball123

SBWife wrote: »

Pot kettle black.

You are being subsidised if you have a tracker because the bank's cost of funds is higher than the interest rate you are being charged on your mortgage. The market for funds has changed in such a way that the margin above the ECB rate included in most tracker mortgage no longer covers the difference between the actual cost of funding for the banks and the ECB rate.

Once again how does the banks day to day financials inpact on an individual contract between a mortgage holder and the bank...The cost of funding yada yada...As I say no one is subsidising my tracker last I seen I am still paying back the full amount with interest...so how is anyone else paying or subsiding me??? Its not my fault the banks fcuked up..So take it up with the bank not the people who are also paying back thier mortgages...All this sh1t of the markets..The markets are not paying my mortgage..people on variable non trackers I know its tough if the cuts are not passed on but dont blame the trackers direct your anger at the banks ..

bryaner

Head The Wall wrote: »

There's nothing to be cheering about really, yes it's a cut in what you're paying but it's still an overpriced mortgage in the majority of cases.


Will any of ye save more than the people like myself who have been saving the last few years and will get a house at a lot cheaper price, I think not. I have something to be happy about

I'd say you've loads of friends..:rolleyes:

SBWife

fliball123 wrote: »

Once again how does the banks day to day financials inpact on an individual contract between a mortgage holder and the bank...The cost of funding yada yada...As I say no one is subsidising my tracker last I seen I am still paying back the full amount with interest...so how is anyone else paying or subsiding me??? Its not my fault the banks fcuked up..So take it up with the bank not the people who are also paying back thier mortgages...All this sh1t of the markets..The markets are not paying my mortgage..people on variable non trackers I know its tough if the cuts are not passed on but dont blame the trackers direct your anger at the banks ..

YOU ARE BEING SUBSIDISED as the interest you are paying does not cover the cost of the funding.

I wish the charter on this board allowed one to report people for simple stupidity.

Welease

fliball123 wrote: »

I am sorry but borrowing or other loans or deposits do not come into this equation..Its a simple transaction aggreement where you get your loan and once you pay back the full amount and interest no one else is subsidising your loan.....If the banks are too caught up with other areas such as over borrowing themselves then thats the banks fault not the people who have tracker mortgages...It is true

But that's the point.. It's not a simple transaction.. because thats not how the financial system works..

Your (and my trackers) are costing the banks money.. It's a simple undisputable fact.. The reasons of who should accept the blame is a completely seperate and irrelevant issue..

http://www.moneybutler.ie/tracker-mortgages-costing-banks-money/

The shortfall in funding for tracker mortgages, will be bridged by higher variable rates, others charges, government funding etc.

woodoo

Welease wrote: »

The shortfall in funding for tracker mortgages, will be bridged by higher variable rates, others charges, government funding etc.

Exactly the reason the EBS has ramped up my variable mortgage over the last 2 years and the reason they don't seem to have passed the latest ECB rate cut on.

They are putting the squeeze on variable rate mortgage holders because they can't do the same to trackers.

fliball123

SBWife wrote: »

YOU ARE BEING SUBSIDISED as the interest you are paying does not cover the cost of the funding.

I wish the charter on this board allowed one to report people for simple stupidity.

Sorry is it my fault or any other trackers mortgagees fault the bank didnt figure this in...the bare facts are I am paying the full amount with interest so your not paying any of my mortgage..and if as you say I am stupid well why didnt you take the offer up when it was going.???? Did you have a Forest Gump moment?? try to be constructive in your posts..and show me how anyone else is subsidising my mortgage when I am paying back the full amount and interest to the bank?