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Should the Government force AIB to lower Mortgage rate ?

  • 05-07-2012 4:31pm
    #1
    Rebel1977
    Registered Users, Registered Users 2 Posts: 802 ✭✭✭


    I personally think it's a disgrace that a Bank we all own now will not pass on the interest rate drop to variable mortgage holders, yet AIB will apparently reduce the rate on deposits for those people who are lucky enough to have savings.


Comments

  • #2
    dotsman
    Registered Users, Registered Users 2 Posts: 3,636 ✭✭✭dotsman


    Rebel1977 wrote: »
    I personally think it's a disgrace that a Bank we all own now will not pass on the interest rate drop to variable mortgage holders, yet AIB will apparently reduce the rate on deposits for those people who are lucky enough to have savings.

    I personally think it's a disgrace that people who know nothing about the situation come on here and demand that AIB reduces it's rates. As a taxpayer (and mortgage holder with AIB), I am quite happy for them to remain the same (far lower than any other bank/credit union).


  • #3
    Rebel1977
    Registered Users, Registered Users 2 Posts: 802 ✭✭✭Rebel1977


    dotsman wrote: »
    I personally think it's a disgrace that people who know nothing about the situation come on here and demand that AIB reduces it's rates. As a taxpayer (and mortgage holder with AIB), I am quite happy for them to remain the same (far lower than any other bank/credit union).

    Why then did they drop deposit rates and penalise deposit holders ?


  • #4
    MugMugs
    Registered Users, Registered Users 2 Posts: 17,875 ✭✭✭✭MugMugs


    dotsman wrote: »
    As a taxpayer (and mortgage holder with AIB), I am quite happy for them to remain the same (far lower than any other bank/credit union).

    Why so?


  • #5
    dotsman
    Registered Users, Registered Users 2 Posts: 3,636 ✭✭✭dotsman


    Rebel1977 wrote: »
    Why then did they drop deposit rates and penalise deposit holders ?
    Why? Why not? What has that got to do with their mortgage lending rates (other than, for a bank to be profitable, their lending rates need to greatly exceed their deposit rates)? And why do you describe it as "penalise"? You are free to move your deposits to another bank if you want.
    MugMugs wrote: »
    Why so?
    well, I don't know about you guys, but I would like, at some stage, for our banks to get back to profitability and being an asset to this economy. Or we can continue to just throw money at them, but then insist they make massive losses - because that strategy has worked out brilliant so far.


  • #6
    ted1
    Registered Users, Registered Users 2 Posts: 23,901 ✭✭✭✭ted1


    No, AIB just gave me a rate of 3.28 that was well below the rate being offered by others. At a lower rate they won't return to profitability.


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  • #7
    MugMugs
    Registered Users, Registered Users 2 Posts: 17,875 ✭✭✭✭MugMugs


    dotsman wrote: »
    Rebel1977 wrote: »
    Why then did they drop deposit rates and penalise deposit holders ?
    Why? Why not? What has that got to do with their mortgage lending rates (other than, for a bank to be profitable, their lending rates need to greatly exceed their deposit rates)? And why do you describe it as "penalise"? You are free to move your deposits to another bank if you want.
    MugMugs wrote: »
    Why so?
    well, I don't know about you guys, but I would like, at some stage, for our banks to get back to profitability and being an asset to this economy. Or we can continue to just throw money at them, but then insist they make massive losses - because that strategy has worked out brilliant so far.

    Are we not undergoing Austerity, increased taxes and job losses / pay cuts as a result of their screw ups though?


  • #8
    dotsman
    Registered Users, Registered Users 2 Posts: 3,636 ✭✭✭dotsman


    MugMugs wrote: »
    Are we not undergoing Austerity, increased taxes and job losses / pay cuts as a result of their screw ups though?

    No.


    And even if all those things were because of "the banks" (and really, none of those things you mention have anything to do with the banking crisis), what good does it come from throwing our money away? We want - we need our banks back to a healthy, strong state asap.


  • #9
    MugMugs
    Registered Users, Registered Users 2 Posts: 17,875 ✭✭✭✭MugMugs


    dotsman wrote: »
    MugMugs wrote: »
    Are we not undergoing Austerity, increased taxes and job losses / pay cuts as a result of their screw ups though?

    No.


    And even if all those things were because of "the banks" (and really, none of those things you mention have anything to do with the banking crisis), what good does it come from throwing our money away? We want - we need our banks back to a healthy, strong state asap.


    I thought they were part of the cause

    I wouldn't want our banks skint. Not at all. I would expect a lot of understanding though from my bank re our current situation and would reward their loyalty to me with my loyalty to them.


  • #10
    dotsman
    Registered Users, Registered Users 2 Posts: 3,636 ✭✭✭dotsman


    MugMugs wrote: »
    I thought they were part of the cause
    Not really! Everyone loves treating the banks as the bogeyman as it deflects attention away from the true issues. The simple fact that we are spending a hell of a lot more than we take in via taxes. All the various spending cuts and tax hikes are to do with that. The banking crisis is simply a one-off loan to the banks (one that has no chance of ever being repaid if the banks are not allowed operate profitably) from the EU/IMF via the Irish State. Since last weekend, it now looks like the Irish State will be bypassed and the EU will directly deal with the Irish banks - yet, there will be no change to our budget/austerity measures - simply because the two are completely unrelated.
    MugMugs wrote: »
    I wouldn't want our banks skint. Not at all. I would expect a lot of understanding though from my bank re our current situation and would reward their loyalty to me with my loyalty to them.
    But they are already extremely "understanding" if you want to use that phrase. AIB have, by far, the cheapest rates already, simply because they are charging their customers less than what they themselves are paying for the money. The reason they are so cheap is because they never passed on the previous rate increases in the first place!


  • #11
    MugMugs
    Registered Users, Registered Users 2 Posts: 17,875 ✭✭✭✭MugMugs


    As a layman, I am not at a financial loss with extra TAXES then as a partial consequence of the Banks having to be bailed out? A debt which became Sovereign?


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  • #12
    dotsman
    Registered Users, Registered Users 2 Posts: 3,636 ✭✭✭dotsman


    MugMugs wrote: »
    As a layman, I am not at a financial loss with extra TAXES then as a partial consequence of the Banks having to be bailed out?
    Nope. As said, all the extra taxes and spending cuts are to do with balancing the budget (a completely separate, and far more serious, problem). The funds that were given to the banks was borrowed by the government. Should the various banks be unable to repay the debts, in time, then tax money would have had to have been used to repay the debts. However...
    MugMugs wrote: »
    A debt which became Sovereign?
    It originally was sovereign debt, but now looks to be taken off the government books. If this turns out to be the case, then taxpayers won't be liable for the debts.


  • #13
    BuffyBot
    Registered Users, Registered Users 2 Posts: 24,924 ✭✭✭✭BuffyBot


    State owned, banks still have to be operated as commercial entities which generate a return on investment.

    While everyone would love *their* mortgage payment to drop, as a collective entity and part owners of said banks, we can't have our cakes and eat them.

    Anyway, that's a whole topic of discussion that's way off course for this thread and probably better suited to the Irish Economy forum. Let's keep this for discussion of the actions of the lenders regarding the rate drop. This isn't a historical forum.


  • #14
    chris85
    Registered Users, Registered Users 2 Posts: 4,502 ✭✭✭chris85


    I dont feel the Irish banks should pass this on on their standard variable rates. We need profitable banks and already have some of the lowest residential mortgage rates in Europe so I dont feel the banks should be pressured to pass it on.


  • #15
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,606 Mod ✭✭✭✭Jim2007


    dotsman wrote: »
    It originally was sovereign debt, but now looks to be taken off the government books. If this turns out to be the case, then taxpayers won't be liable for the debts.

    Ya think so! Tell me who owns the banks????

    Don't be fooled by the accounting... it really does not matter where they put it, in the end we'll have to foot the bill if they banks can't pay it off.


  • #16
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,606 Mod ✭✭✭✭Jim2007


    Rebel1977 wrote: »
    Why then did they drop deposit rates and penalise deposit holders ?

    Unlike may European banks, Irish banks have a big problem in this area because they are using short term deposits to finance long term loans (mortgages in most cases). This being the case the banks need to try and push the deposit rates down at every opportunity to have an chance of regaining their profitability.


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