AIB increasng mortgage rates by 0.5% again!!

Rebel1977

AIB increasing rates by another 0.5%, thats a 1% increase in last two months this is a joke, first they bring back back fees on current accounts and now they cripple the tax payer again with another increase.


http://www.rte.ie/news/2012/1003/aib-mortgage-rates.html

maddragon

I'm so angry with this shower now. Unfortunately I'm going to have to start playing silly buggers with my mortgage now. Another €75 per month ontop of the €75 last month is going to hurt us badly (250k mortgage).

It's what I've been saying all along. 2013 will be by far the worst year to date in this downturn. Property tax, water charges, reduced children's allowance, mortgage hikes, income tax increases and food/fuel inflation is going to cripple many families just about coping now. House for sale for 2 years now so we can't even apply for Mortgage interest supplement. What a sh1te Christmas this is going to be.

Rebel1977

Would it be worth fixing your mortgage now I wonder ?

Diarmuid

Rebel1977 wrote: »

they cripple the tax payer again with another increase.

Actually the exact opposite. They are saving the tax payer, who has been subsidising their loss making mortgages and hitting their customers with an increase.
You could also make the case that the variable rate customers are subsidising the tracker customers.

Rebel1977

Diarmuid wrote: »

Actually the exact opposite. They are saving the tax payer, who has been subsidising their loss making mortgages and hitting their customers with an increase.
You could also make the case that the variable rate customers are subsidising the tracker customers.

Why are you supporting the Bank ?

These rate increases will only push more people into mortgage arrears do you not think ?

cookie1977

And from there onto social welfare or MARP and so the tax payer still pays. Get the economy right first then get the banks right.

chris85

Rebel1977 wrote: »

Why are you supporting the Bank ?

These rate increases will only push more people into mortgage arrears do you not think ?

I think he is supporting the bank becoming profitable and reducing the input of the taxpayer's money which is crucial for the long term sustainability of the bank. I am not in support of the increase but see the reasoning behind it. It will obviously not be beneficial to variable rate customers.

It is bad timing that they paid out €1bn to bondholders this week and then increase the rate. Poor decision to pay it but under pressure to ensure it got paid from troika. All in all I would have been up for not paying out the €1bn and not increasing the rate but thats how its happened.

cookie1977

chris85 wrote: »

I think he is supporting the bank becoming profitable and reducing the input of the taxpayer's money which is crucial for the long term sustainability of the bank.

Yes but again the problem here is that if the increases push people into the social welfare net then the tax payer is still paying for the banks losses. If people can just about say pay 2000 a month on their mortgage and the bank increases the rate such the repayments become 2100 and thus are unaffordable, they then enter a MARP process where they may only end up paying the bank 1500 a month instead. The bank looses and the tax payer looses.

Lets say the person can afford the increase (just). They then have reduced their disposable income and so that slows the economy down. Banks need to loan to make money. If people are solely focused on paying their bills they wont borrow and the banks dont make money, and again the taxpayer pays.

It's a vicious circle. The banks dont seem to be thinking much further then the next ECB meeting. They need a long term outlook to become profitable again and that is deeply linked to how the economy is doing. Fix the economy and the banks will become profitable again. Over burden the population with ever in creasing debt and the economy will stagnate for longer and the banks will continue to struggle.

chris85

cookie1977 wrote: »

Yes but again the problem here is that if the increases push people into the social welfare net then the tax payer is still paying for the banks losses. If people can just about say pay 2000 a month on their mortgage and the bank increases the rate such the repayments become 2100 and thus are unaffordable, they then enter a MARP process where they may only end up paying the bank 1500 a month instead. The bank looses and the tax payer looses.

Lets say the person can afford the increase (just). They then have reduced their disposable income and so that slows the economy down. Banks need to loan to make money. If people are solely focused on paying their bills they wont borrow and the banks dont make money, and again the taxpayer pays.

It's a vicious circle. The banks dont seem to be thinking much further then the next ECB meeting. They need a long term outlook to become profitable again and that is deeply linked to how the economy is doing. Fix the economy and the banks will become profitable again. Over burden the population with ever in creasing debt and the economy will stagnate for longer and the banks will continue to struggle.

I understand that but the banks objective is not in line with the economic objectives of the government. The bank are only concerned with getting into profit. They have little concern for economic growth. They will have carried out a risk analysis of the effect of the rate increase and the amount of arrears which will occur due to it and have made a decision that the rate increase is worth it even if sends a certain amount of customers into arrears or deeper into arrears.

I dont agree with the increase at all but just giving my opinion on their logic really.

NIMAN

Not happy with this either as an AIB SVR customer, but thankfully I have a relatively small mortgage with them so will not be hit as hard as many others.

1% increase in 3 months is tough in these times, and I am sure it won't be the last increase.

Trampas

Like everything in this country we rather increase our prices instead of cutting our costs.

cookie1977

chris85 wrote: »

I understand that but the banks objective is not in line with the economic objectives of the government. The bank are only concerned with getting into profit. They have little concern for economic growth. They will have carried out a risk analysis of the effect of the rate increase and the amount of arrears which will occur due to it and have made a decision that the rate increase is worth it even if sends a certain amount of customers into arrears or deeper into arrears.

I dont agree with the increase at all but just giving my opinion on their logic really.

But shouldn't they be interested in economic growth too? Shouldn't they since they are almost completely owned by the state and that one without the other wont survive?

Based on their previous attempts at "risk analysis" I dont put much faith in their abilities.

We have a tough budget coming up which they dont know about which may/will push more people into trouble. They appear to me to be only looking at the immediate short term and not at the big picture.

NIMAN

Trampas wrote: »

Like everything in this country we rather increase our prices instead of cutting our costs.

To be fair to the banks they are cutting their costs.

AIB are laying off a lot of staff and closing a lot of smaller branches.