Expected ECB Cut of Min 0.5% January!

Ginger83

This should bring the current ECB rate below 2%. Although tracker mortgages will automatically follow a cut I wonder if some of the banks will stand by their previous statements not to pass on further cuts.
Any thoughts?

Bass Cadet

Ginger83 wrote: »

This should bring the current ECB rate below 2%. Although tracker mortgages will automatically follow a cut I wonder if some of the banks will stand by their previous statements not to pass on further cuts.
Any thoughts?

where did ya hear that? Have ya got a link?

Scottie99

I wonder if they will do this here......I expect so!


http://uk.news.yahoo.com/5/20090102/tbs-nationwide-no-more-rate-cuts-327c223.html :mad:

adox

Welll First Active and Ulster Bank have already led the way by only passing on .5 of the .75% cut the last time.:mad:

daveirl

This post has been deleted.

JTMan

Most people are predicting a cut somewhere between 25 and 75 bps. lets hope it is the latter.

sofireland

Could be the half percent imo
the ecb doesn't want to use all its rope yet.

s_carnage

Scottie99 wrote: »

I wonder if they will do this here......I expect so!


http://uk.news.yahoo.com/5/20090102/tbs-nationwide-no-more-rate-cuts-327c223.html :mad:

It says in that article that they will not pass on any further cuts by the Bank of England. I'd imagine they would pass on cuts from the ECB though.

kippy

s_carnage wrote: »

It says in that article that they will not pass on any further cuts by the Bank of England. I'd imagine they would pass on cuts from the ECB though.

I wonder if they will do this here......I expect so!


http://uk.news.yahoo.com/5/20090102/...s-327c223.html

I spotted this some time ago and asked a question about it on AAM.
In some English banks tracker mortgage terms and conditions there is a floor built in basicilly saying that trackers can only go below a certain rate. (English Banks rates (those operating in England) are tracked to the BOE base rates I believe)

Apparently there are no such clauses built into the tracker mortgages of Irish consumers......

See here:
http://www.askaboutmoney.com/showthread.php?t=96833&highlight=kippy

dotsman

adox wrote: »

Welll First Active and Ulster Bank have already led the way by only passing on .5 of the .75% cut the last time.:mad:

Are you sure about this? I would have thought there would be war if they didn't pass on the rate cuts to tracker mortgages.

djsctt

dotsman wrote: »

Are you sure about this? I would have thought there would be war if they didn't pass on the rate cuts to tracker mortgages.

I presume this refers to variable rate, rather than tracker (could be wrong though).

dotsman

djsctt wrote: »

I presume this refers to variable rate, rather than tracker (could be wrong though).

Oh, my misunderstanding.

If it's variable, it's understandable that not all cuts will be passed on. Ultimately, that is the definition of a variable - that the bank choses the rate. As a mortgage holder with both a tracker and a variable, I certainly hope they pass on the cut in full, but at a certain stage they will have to say - "listen, we are making a loss on this, so no more cuts!".

20goto10

The problem is that the bank rates were traditionally tied to the EURIBOR rates or in the case of the UK they were tied to the LIBOR rates. This is the rate for interbank lending. With the credit crunch this went out of sync, so a drop in ECB rates technically should not be reflected in peoples mortgages....BUT, the banks are responsible for the recession and have also been bailed out at the expense of the tax payer so therefore have an obligation to pass on all ECB rate cuts. If they don't, then the rate cut is ineffective to the recovery of the economy. All it does is give the banks more profit (or less losses). To not pass on the rate cuts would be suicide in the Irish market imo.

dotsman

20goto10 wrote: »

The problem is that the bank rates were traditionally tied to the EURIBOR rates or in the case of the UK they were tied to the LIBOR rates. This is the rate for interbank lending. With the credit crunch this went out of sync, so a drop in ECB rates technically should not be reflected in peoples mortgages....

Agree

20goto10 wrote: »

BUT, the banks are responsible for the recession and have also been bailed out at the expense of the tax payer so therefore have an obligation to pass on all ECB rate cuts. If they don't, then the rate cut is ineffective to the recovery of the economy. All it does is give the banks more profit (or less losses). To not pass on the rate cuts would be suicide in the Irish market imo.

Have a few problems with this.

Firstly, it's a very tabloid-style decision to say that the banks are responsible for the recession. I could name a number of other people I would blame ahead of the banks (not saying banks are innocent, just that they have been made the whipping boy, to prevent the real culprits from receiving the blame).

Secondly, the "Bailout" as the media has put is is NOT at the taxpayers expense. In fact, it is the opposite. The banks are paying the government for the investment, thus subsidising the taxpayer. The taxpayer has, to date, made a lot of money out of the deal. However, should a bank fail, then yes, it will cost the taxpayer. Which leads me on to the last point...

What is the point of the guarantee/small recapitalisation if we don't allow the banks to recover? If we force them to lose money on their customers, then they will fail and we'll end up footing the bill. There's so much misinformation (courtesy of our media) around this with every Joe on the street saying "oh, sure we 'own' the banks now, they must do whatever we want (even if that means them making a loss)". This couldn't be further from the truth. For example, some people are demanding that the banks lend out to more (risky) people/businesses. FFS, that's what got the banks into trouble in the first place! The whole reason for the guarantee was to allow the banks time to reorganise their loan books (write off the bad debts and replace it with safe loans). Making them replace the bad debts with even more bad debts will destroy this country. Likewise, people are demanding that they make a loss on their business, yet expect them to be able to write off the bad debts? Where is this money to come from? If we're not allowing them to continue to make money (so they can write off the bad debts), then they will need to get the money from the government, so we don't gain anything from doing this (and possibly lose a lot more)

adox

dotsman wrote: »

Are you sure about this? I would have thought there would be war if they didn't pass on the rate cuts to tracker mortgages.

Variable mortgages.

green-blood

yep, UB only passed on 2/3 of the last cut... and I will be passing on 100% of my mortgage to some other institution ASAP.

Emma1980

so far everyone barr ebs have said they'd pass on the 0.5% in full! come on ebs...!!!! :eek:

pgroarke

http://news.bbc.co.uk/2/hi/business/7830611.stm

AIB trackers definitely don't have a floor. Havent heard of any Irish lenders that built a floor into their products.

pgroarke

http://news.bbc.co.uk/2/hi/business/7830611.stm

AIB trackers definitely don't have a floor. Haven't heard of any Irish lenders that built a floor into their products.

Auvers

does anybody know if KBC are passing on this rate change?

dotsman

Emma1980 wrote: »

so far everyone barr ebs have said they'd pass on the 0.5% in full! come on ebs...!!!! :eek:

According to RTE, EBS are as well.

Now, the question remains - WHEN will they pass the cut on?

My bets are on either AIB or Halifax (both seem to have been the best so far!)

Also, before people start complaining - it should be noted that, although announced today, it doesn't take effect until the 21st. Therefore, the banks should pass it on within a week of that (ie January 28th). If you are well into February and your bank still hasn't passed on the cut, then they are just taking the pi$$ and should be named and shamed.

adox

dotsman wrote: »

According to RTE, EBS are as well.

Now, the question remains - WHEN will they pass the cut on?

My bets are on either AIB or Halifax (both seem to have been the best so far!)

Also, before people start complaining - it should be noted that, although announced today, it doesn't take effect until the 21st. Therefore, the banks should pass it on within a week of that (ie January 28th). If you are well into February and your bank still hasn't passed on the cut, then they are just taking the pi$$ and should be named and shamed.

Dont they have 30 days to pass on the cut? If so I would guess the towards the end of Feb.

dotsman

adox wrote: »

Dont they have 30 days to pass on the cut? If so I would guess the towards the end of Feb.

Yes, they have 30 days. But most (if not all banks) were passing on their increases within a week when things were going up. So I believe it is only fair that it should be the same time frame for the decreases (I'm not going to complain about a day or 2 of a difference, but several weeks? Feck that)

kippy

dotsman wrote: »

Yes, they have 30 days. But most (if not all banks) were passing on their increases within a week when things were going up. So I believe it is only fair that it should be the same time frame for the decreases (I'm not going to complain about a day or 2 of a difference, but several weeks? Feck that)

In fairness, with PTSB anyway, the increases were in general passed on in line with the decreases we've recently had (from what I can see anyway)
Kippy

dotsman

kippy wrote: »

In fairness, with PTSB anyway, the increases were in general passed on in line with the decreases we've recently had (from what I can see anyway)
Kippy

Are they? I'm not with PTSB, so can't say for certain, but from this thread, this post seems to say not!

Had a look at their website and their variable is still 0.75 higher than AIB/Halifax which, from my amateur observations, seem to be the only 2 banks actively competing for mortgages, with BOI in 3rd place putting in a token effort:)

kippy

dotsman wrote: »

Are they? I'm not with PTSB, so can't say for certain, but from this thread, this post seems to say not!

Had a look at their website and their variable is still 0.75 higher than AIB/Halifax which, from my amateur observations, seem to be the only 2 banks actively competing for mortgages, with BOI in 3rd place putting in a token effort:)

Sorry,
I was talking about their tracker products.
They are under no obligation to pass on ECB rate cuts to their variable rate customers at all.
I think there is a bit of confusion on this thread in relation to the passing on of such ECB rate decreases to variable rate customers (mention of 30 days is in relation to tracker rate only)
Kippy

dotsman

kippy wrote: »

Sorry,
I was talking about their tracker products.
They are under no obligation to pass on ECB rate cuts to their variable rate customers at all.
I think there is a bit of confusion on this thread in relation to the passing on of such ECB rate decreases to variable rate customers (mention of 30 days is in relation to tracker rate only)
Kippy

I agree there is a bit of confusion about if people are talking about trackers or variable.

Basically, trackers have to pass on the rate cut (and as already said, should be within the same time frame as the bank previously passed on the rate increase - although I concur they can technically delay it, but that's just bad customer service).

Variables don't have to pass on anything. The rate is set by the bank (and the bank alone) and they could even increase it if they want (the media would love that:D). That being said, out of customer loyalty, they should pass on the full cut (or vast majority of it) promptly. Banks have been competing fiercely over the past few years for mortgages, with each trying to outdo the other with discounts and higher LTV's etc. But I think now is the real test as to which banks are good and which aren't! I'm not siding with any one bank or against any one bank! I wish they were all equally brilliant:)