Unfair mortgage rates in Ireland

koheim

AIB made 1.9 billion euro in profit before tax in 2015, But still i should accept to pay interest rates at a stupid rate. Interest rates will eventually go down in Ireland AS well, money will become cheaper for everyone eventually

athtrasna

Folks we're straying into territory more suited to the banking forum.

Q&A

athtrasna wrote: »

Folks we're straying into territory more suited to the banking forum.

It can't be helped if you're too have a fair and informed discussion on where we stand. Mortgages and banking are intertwined

koheim wrote: »

AIB made 1.9 billion euro in profit before tax in 2015

They did make 1.9bn on assets of 100.3bn, I.e., 1.9% return. Half of that was from the write back of money that had originally been put aside for bad loans. So you're looking at an actually return on their banking businesses of less than 1%. That's not as eye catching a figure as yours but puts it in some context for you.

koheim wrote: »

But still i should accept to pay interest rates at a stupid rate.

I would say yes but it's your call no one forced you to sign your mortgage contract. At the same time it would seem no one could force you out of your property if you decide not to pay.

koheim wrote: »

Interest rates will eventually go down in Ireland AS well, money will become cheaper for everyone eventually

Rates should converge, eventually as tracker mortgages are paid off. Bad loans are removed and people follow through on their commitments. But that will be a slow process.

Calina

koheim wrote: »

AIB made 1.9 billion euro in profit before tax in 2015, But still i should accept to pay interest rates at a stupid rate. Interest rates will eventually go down in Ireland AS well, money will become cheaper for everyone eventually

TBF, if the rates are to be deemed stupid at all, it's that they are historically low rather than historically high.

Sleeper12

Wesser wrote:

According to this man, Irish mortgage rates are on average 1.8 percent higher than our European counterparts. Eg 3.6 % versus 1.8%

In the first year of my mortgage interest rates went up to 15%. They are at an all-time low at the moment. I shudder to think what people with large mortgages are going to do when rates start to increase

Tin Roofer

Sleeper12 wrote: »

In the first year of my mortgage interest rates went up to 15%. They are at an all-time low at the moment. I shudder to think what people with large mortgages are going to do when rates start to increase

Which will happen when it suits the German economy.

lawred2

Calina wrote: »

Business conditions here can be quite different to business conditions elsewhere. For example, at a time where you needed a 10% deposit in Ireland, you needed a 25% deposit to buy in Germany.

It is entirely possible that if we were not part of the eurozone though and had a floating currency, that our interest rates could, at various points, have been significantly higher than they are now. So the question you need to ask is this: would you prefer to pay 3.6% on your mortgage of 15% on your mortgage. There are still a few people alive who'd probably cut your legs off to pay 4% instead of the 15% they paid at various points.

The point is, if you want things to be similar here to elsewhere, you need to swallow other things being different. Germany has a 15% charge for mandatory health insurance for example. The water charges are way higher in parts of Belgium to what they are here, as they are in France. There's an element of swings and roundabouts here and that's before you look at the fact that there was a 12 month moratorium on repossessions (except from investors whose tenants wound up getting messed around instead).

Which would you prefer - it to be easier for the banks to repossess in payment failure, or lower interest rates?

I agree with you generally but your examples about health insurance and water charges have zip to do with mortgage rates or housing markets.

lawred2

davo10 wrote: »

Banks don't borrow from the ECB at the "ECB rate", they borrow at a banking prime rate.

Nor was a tracker mortgage ever lent out at the ecb rate.

lawred2

[Deleted User] wrote: »

Don't forget that these rates are historically really really low. Nobody should have problems repaying such mortgages. If they do, think of what will happen if the rates rise by, say 3%, an entirely possible event in a few years....

My first mortgage here had rates in the mid teens....

Yeah but the principal was nothing like it would be now..

athtrasna

Mod note

Lawred2 and A_Sober_Paddy please remember that this is the accommodation and Property forum, not a place for political rants. Posts deleted.

lawred2

Wrong place maybe. Rant hardly

Calina

lawred2 wrote: »

I agree with you generally but your examples about health insurance and water charges have zip to do with mortgage rates or housing markets.

They do illustrate however that expecting things to be the same in countries with different business conditions is futile and here are a couple of other examples.

But ymmv. Fact remains we make it easier to borrow money and harder to repossess if that money isn't paid back. Net result, interest rates will be higher.