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Public Meeting on Standard Variable Rate Mortgages

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    #2
    murphaph
    Registered Users Posts: 19,021 ✭✭✭✭murphaph


    I smell a vested interest there with that campaign. Actually I smell several vested interests.

    SVR rates are actually not very high. They are high relative to Germany or to tracker mortgages taken out at a particular time before the crash. If people are struggling with 4% SVRs then they made a terrible decision taking on a mortgage that they could not afford.

    If the banks were making money hand over fist with their 4% SVRs then foreign competition would come in and charge 3% and still make money hand over fist. Ireland has the rates it has for a reason: repossessing a house in Ireland is much too difficult and Irish property is at the end of the day a less reliable security than a German property as Irish property prices are much less stable. A bank gets your home as security but when the next bubble bursts the security is worth half the outstanding amount...not great security by any stretch of the imagination.

    A German house won't yo-yo in price. It will generally remain where it is, maybe going up little, maybe down a little. This boring property market where nobody has even heard of gazumping is the reason German mortgages are dirt cheap. If you want German mortgage interest rates, you need a German economy and property market to back them and you need a similar legal system that allows swift repossession of properties in cases of default.

    Are these SVR protesters pushing for these changes, or just "we want tracker rates"?

    It comes down to this: Irish banks made a mistake in offering trackers following the ECB rate. Their funding was never related to this rate. Trackers are still available here in Germany but they track the EURIBOR rate as they always did. When the ECB modifies interest rates here it barely makes the news because it affects hardly anyone on the street in this direct way. Irish borrowers who didn't take advantage of this mistake by the banks now want to be allowed to do so. That's all this comes down to. The fact is all sorts of different people are paying all sorts of different rates for different products.


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