Will mortgage interest rates in Ireland now come down?

Tough03

Do the Irish banks now need to lower the interest rates they charge to their customers. Many people will be losing their jobs, some might not be losing their jobs but they might have less hours to work or their pay may be reduced.
Should the government how force the banks to lower their mortgage interest rates?

KilOit

Hard to know, i'm very close to signing a mortgage switch at %2.3

Q&A

Tough03 wrote: »

Do the Irish banks now need to lower the interest rates they charge to their customers. Many people will be losing their jobs, some might not be losing their jobs but they might have less hours to work or their pay may be reduced.
Should the government how force the banks to lower their mortgage interest rates?

Banks have plenty of experience in restructuring loans thanks to e financial crises. They've already started offering deferred payment options.
What, if any, additional measures they might take will likely follow a similar approach as before. People required to re-engage with their banks and both parties hammering out a restructuring.

Will there be a general rate cut for all to benefit? Doubtful, if anything it might mean the opposite. Banks aren't charities, they need to balance the books/turn a profit. At the beginning of the last crises banks actually put up rates. If a portion of loans are not paying it puts more focus on banks squeezing a return out of the rest of us. A big difference between now and the last crises is that a lot more people have fixed their mortgages. They can't be touched but plenty of inertia and people sitting on expensive variable rates. They'd be an easy target.

Of course banks might be benefiting already as interbank/swap rates might have fallen so funding is cheaper. Of course if there is a mass default on loans it would see an increase in perceived riskiness and could result in higher funding costs.

dotsman

If anything, the past few weeks reduces the chances of interest rate cuts. Increases are more likely if things continue the way they are.

Once this immediate crisis is over, the country then also needs to sort out a government. If it features Sinn Fein, expect interest rates to rise.

markad1

KilOit wrote: »

Hard to know, i'm very close to signing a mortgage switch at %2.3

Who's that with?

KilOit

markad1 wrote: »

Who's that with?

Ulser bank, they offer 2.2 for 5 years fix if over 300k

theteal

dotsman wrote: »

If anything, the past few weeks reduces the chances of interest rate cuts. Increases are more likely if things continue the way they are.

Once this immediate crisis is over, the country then also needs to sort out a government. If it features Sinn Fein, expect interest rates to rise.

Not that much of what the UK has done recently should be followed but they have knocked the rate down to .1%. I'm not sure why you think increases would be more likely.

Henry Ford III

Interest rates are on the floor as is. I can't see any further scope.

Lenders margins however......

dotsman

theteal wrote: »

Not that much of what the UK has done recently should be followed but they have knocked the rate down to .1%. I'm not sure why you think increases would be more likely.

For the past number of years, interest rates in Ireland have been significantly higher than the EU average. This is primarily because of the extreme difficulties banks have with delinquent loans. ultimately, the interest rate is set at a rate that the overall loan book is profitable. The higher the number of defaults and the more costly/time confusing it is to deal with defaulters, the higher the interest rate needs to be set at to make the overall loan book profitable.

Right now, with the COVID-19 crisis, A) a prolonged financial crisis will result in a higher number of defaulters and repossessions etc have been temporarily halted until the crisis is over. Both the factors will have some impact on mortgage interest rates.

My point about SF is that their policies would make mortgage lending even more expensive, thus having a negative impact on interest rates.

Geuze

dotsman wrote: »

If anything, the past few weeks reduces the chances of interest rate cuts. Increases are more likely if things continue the way they are.

??????


Several CB have cut rates.

USA
UK
Australia

dotsman

Geuze wrote: »

??????


Several CB have cut rates.

USA
UK
Australia

The ecb rate is already at 0.05%. Not much more they can cut it by. Going negative on the refi rate would have very strange consequences. Besides, unless you have a tracker, it won't make much of a difference. As per reasons above the main factor impacting irish banks interest rates is loan delinquency, and the extremely limited power they have to actually realise the actual mortgage security underpinning the loans.

Geuze

dotsman wrote: »

The ecb rate is already at 0.05%. Not much more they can cut it by. Going negative on the refi rate would have very strange consequences.

Please note that the main ECB rate has been 0% since 16 Mar 2016

https://www.ecb.europa.eu/stats/policy_and_exchange_rates/key_ecb_interest_rates/html/index.en.html

dotsman

Geuze wrote: »

Please note that the main ECB rate has been 0% since 16 Mar 2016

https://www.ecb.europa.eu/stats/policy_and_exchange_rates/key_ecb_interest_rates/html/index.en.html

You're right!

Moving from 0.05 to 0.0 made such little difference I forgot about it:D

sabinalee

So, if I can ask you for advice...
My fixed term is about to finish in July 3020,
BOI, 3.2% interest.
Should I ask in my bank first for another 3 years with similar rate or ask other banks?
I'm.just afraid that already high variable rates will kill mr.

Geuze

sabinalee wrote: »

So, if I can ask you for advice...
My fixed term is about to finish in July 3020,
BOI, 3.2% interest.
Should I ask in my bank first for another 3 years with similar rate or ask other banks?
I'm.just afraid that already high variable rates will kill mr.

Check for the Best Buys on AAM.

https://www.askaboutmoney.com/