I still have to pay 100% more interest on my mortgage than any other European

koheim

http://www.independent.ie/business/irish/german-lender-promising-cheap-loans-meets-resistance-as-politicians-seek-to-protect-aib-and-boi-36072622.html

The insane interest rate we have in Ireland will stay, think it is a levy to keep bailing out AIB and BoI....

I would love to cut 250 Eurp a month of my monthly outgoings:
http://www.independent.ie/business/personal-finance/property-mortgages/mortgage-holders-here-pay-250-more-than-eu-average-each-month-36024788.html

Can anyone explain to me why we have this situation? What is the banks excuse? Where is the Consumer Protection Commission?

Lumen

koheim wrote: »

Can anyone explain to me why we have this situation?

It is almost impossible in Ireland to repossess a property on which mortgage is not being repaid.

CramCycle

minikin wrote: »

It was a nonsense statement - like saying almost pregnant.
Something is either impossible or it's not.

The associated time and cost with repossessing a house in Ireland is alot, therefore banks insure against this by having higher interest rates than other countries where it is not as time consuming/expensive.

It is alot like motor insurance, your basically paying a bit extra for those who do not pay.

They also want to make as much money as possible without losing customers. The current typical rates reflect what the market is willing to pay and what they can afford to go with in regards not putting people doing business with them.

jester77

Here in Germany, if you don't pay then you are out. You would be laughed at if you tried to organise a protest in front of your house for not paying your bills.

That is why you can get a fixed mortgage for 20+ years for < 2%.

minikin

I'm sorry but I don't buy that excuse (The cost of evictions) for a minute.

Very rough estimate: 750,000 residential mortgages live at the moment
x average €250 overcharge per month
= €187.5 million overcharge per month
= €2.25 billion overcharge per annum.

Are people seriously suggesting that they are losing a similar amount in unpaid mortgage repayments every month?
(yes I know the €250 figure relates to new mortgages but you can be damn sure a similar metric (paddy tax) has applied here for the past 30 years)

dok_golf

The rates are high because
A. The banks have to repay bailout either directly or indirectly by showing a profit whereby the government can sell its shares on behalf of the people at a better price.
B. Because the credit ratings of Irish banks still isn't as good as e.g. German ones, it costs more to borrow
C. Only 2 banks really so therefore no competition

Lumen

minikin wrote: »

I'm sorry but I don't buy that excuse for a minute.

Very rough estimate: 750,000 residential mortgages live at the moment
x average €250 overcharge per month
= €187.5 million overcharge per month
= €2.25 billion overcharge per annum.

Are people seriously suggesting that they are losing a similar amount in unpaid mortgage repayments every month?

Where are you getting these numbers from?

Do they include the stock of trackers?

minikin

They are very fair questions Lumen, thank you for posing them, I have edited my post to answer without the use of humour this time:

1. Those figures, which I qualified as being 'very rough estimates' are explained in the above post.
2. Tracker mortgages certainly have some influence on the figures, I certainly considered them when making the calculations.

Lumen

Seems like there's about 1% of excess fat.

Are greedy mortgage lenders about to see enormous margins squeezed?
http://www.independent.ie/business/personal-finance/property-mortgages/are-greedy-mortgage-lenders-about-to-see-enormous-margins-squeezed-35837228.html

AIB's net interest margin hit 2.25pc in 2016 and had climbed to 2.42pc by the fourth quarter of last year...The net interest margin of Deutsche, Germany's biggest bank, is just 1.42pc.

1641

dok_golf wrote: »

The rates are high because
A. The banks have to repay bailout either directly or indirectly by showing a profit whereby the government can sell its shares on behalf of the people at a better price.
B. Because the credit ratings of Irish banks still isn't as good as e.g. German ones, it costs more to borrow
C. Only 2 banks really so therefore no competition

Something in all of these, I think. But why are there only 2 banks (well, 4 or 5) if there is such a killing to be made? There is nothing to prevent one of the EU banks coming in - instead they are leaving or have left. I certainly think the great difficulty in getting timely repossession compared to most other countries is a factor. But imagine the outcry if the laws were proposed to be changed to facilitate easier repossession.

A further factor is that the banks are losing money on tracker mortgages and new mortgages are helping to compensate for this loss.

Lumen

1641 wrote: »

But why are there only 2 banks (well, 4 or 5) if there is such a killing to be made?

The Irish market is really small. 17,000 Irish mortgage approvals in 2016. That's about 2% of volumes in the UK. Anyone got stats for Germany or France?

Cuddlesworth

Lumen wrote: »

The Irish market is really small. 17,000 Irish mortgage approvals in 2016. That's about 2% of volumes in the UK. Anyone got stats for Germany or France?

That and the CB has just been sitting on applications.

wordofwarning

Lumen wrote: »

It is almost impossible in Ireland to repossess a property on which mortgage is not being repaid.

This is definitely a factor in why mortgages are more expensive. But when a German Bank and a non-money lender are fighting to get a license to sell mortgages in Ireland, yet are struggling. You have to ask, are mortgages expensive in Ireland to recoup the bailout money? It would seem it is a factor

Despite the massive non-performing loans in Ireland. Some Irish banks are extremely profitable.

Lets open the market to fair competition and see what a functioning market sees as a right premium for dodgy repossession laws in Ireland

Bubbaclaus

minikin wrote: »

I'm sorry but I don't buy that excuse (The cost of evictions) for a minute.

Very rough estimate: 750,000 residential mortgages live at the moment
x average €250 overcharge per month
= €187.5 million overcharge per month
= €2.25 billion overcharge per annum.

Are people seriously suggesting that they are losing a similar amount in unpaid mortgage repayments every month?
(yes I know the €250 figure relates to new mortgages but you can be damn sure a similar metric (paddy tax) has applied here for the past 30 years)

You don't have to "buy that excuse", but it is the reason. If the bank could repossess assets from non-performing loans easier than rates would go down significantly.

737max

1641 wrote: »

There is nothing to prevent one of the EU banks coming in -

Front page of Sunday Business Post yesterday would disagree. The Government is allegedly supporting the Banks due to their large stake in the Banks.

Tar.Aldarion

There is no way it has got to do with repossessions, that is a tiny fraction of how much they are making extra every year. Less than 1% of the value of mortgages is in arrears. Those figures were from 2011 when things were way worse than now even.

Basically they are in the business of making money and know they can do it, and have no competition - and huge protections from the country.

dubrov

Arrears doesn't include restructured and default mortgages.

No way it is only 1% as well

Tar.Aldarion

dubrov wrote: »

Arrears doesn't include restructured and default mortgages.

No way it is only 1% as well

10% of mortgages were restructured. Yes it was less than 1%, <1 billion in arrears out of a total mortgage value of 115 billion for 777,000 homes. It's probably less now as that was 6 years ago and I don't know figures since then, however things are much better here and unemployment shot down at ridiculous pace. Nearly 10% lower now.

Lumen

Tar.Aldarion wrote: »

Less than 1% of the value of mortgages is in arrears.

Nope.

Q1 2017 stats:

Central Bank wrote:

Residential Mortgages on Principal Dwelling Houses

The outstanding balance on all lenders’ PDH mortgage accounts in arrears of more than 90 days was €10.7 billion at end-March, equivalent to 11 per cent of the total outstanding balance on all PDH mortgage accounts...For all institutions, the value of accounts in longer-term arrears over 360 days remains large, amounting to just under €8.8 billion at end-March 2017.

Residential Mortgages on Buy-to-Let Properties

The outstanding balance on all BTL mortgage accounts in arrears of more than 90 days was €5.5 billion at end-March, equivalent to 24 per cent of the total outstanding balance....Accounts in arrears of over 720 days now number 14,367 or 11 per cent of the total stock of BTL mortgage accounts, and 88 per cent of outstanding arrears. The outstanding balance on these accounts was €4.2 billion at end-March, equivalent to 18 per cent of the total outstanding balance on all BTL mortgage accounts.

Source: https://centralbank.ie/news-media/press-releases/residential-mortgage-arrears-and-repossessions-statistics-q1-2017

...and then there's the massive can-kicking exercise of restructuring arrangements.

Tar.Aldarion

Lumen wrote: »

Nope.

Q1 2017 stats:



Source: https://centralbank.ie/news-media/press-releases/residential-mortgage-arrears-and-repossessions-statistics-q1-2017

...and then there's the massive can-kicking exercise of restructuring arrangements.

There is a difference in the value of accounts that are in arrears and how much is actually in arrears. To take the figures I know off hand, the value of "mortgage accounts in arrears" in 2011 was also 8 billion, but the amount in arrears was less than 1 billion.

smurgen

Absolutely disgraceful that the government would block competition for competative mortgages.literally ripping off the ordinary citizens to support inefficient and overly large irish banks.

1641

737max wrote: »

Front page of Sunday Business Post yesterday would disagree. The Government is allegedly supporting the Banks due to their large stake in the Banks.

Perhaps they are to some extent - I don't know. If so, I assume it is with a view to getting as much back as possible of the taxpayer money that was put into them. If they are not profitable the value of the shares will be very little.That seems like transferring bank losses onto the taxpayer again - or,at least, not getting any of their money repaid. Meanwhile a new bank with no overhang of non-performing loans could skim all the cream.

BailMeOut

smurgen wrote: »

Absolutely disgraceful that the government would block competition for competative mortgages.

are they? Isn't just that foreign banks just do not want to do business here at the moment.

1641

smurgen wrote: »

Absolutely disgraceful that the government would block competition for competative mortgages.literally ripping off the ordinary citizens to support inefficient and overly large irish banks.

Inefficient ? Yet we complain when banks cut costs - cutting staff, closing branches, restricting services at branches, etc.

Lumen

Tar.Aldarion wrote: »

There is a difference in the value of accounts that are in arrears and how much is actually in arrears. To take the figures I know off hand, the value of "mortgage accounts in arrears" in 2011 was also 8 billion, but the amount in arrears was less than 1 billion.

OK, in that case the arrears balance numbers from March 2017 are:

PDH: 2.71bn (2.73% of total outstanding balance of all PDH mortgages)
BTL: 1.91bn (8.17% of total outstanding balance of all BTL mortgages)

Source: https://www.centralbank.ie/statistics/data-and-analysis/credit-and-banking-statistics/mortgage-arrears

Or in graph form for PDHs:



Source: http://www.thepropertypin.com/viewtopic.php?f=1&t=65651&start=150

There are seventy six thousand PDH mortgage arrears cases outstanding. That is an insane number.

Where did you get the 1% number from?

Allinall

737max wrote: »

Front page of Sunday Business Post yesterday would disagree. The Government is allegedly supporting the Banks due to their large stake in the Banks.

I'm not really sure what that means.

There are European banks here already in the mortgage market, and most are leaving voluntarily.

That would leave me to believe that the market is not that attractive, despite the supposed high margins.

Deagol

koheim wrote: »

http://www.independent.ie/business/irish/german-lender-promising-cheap-loans-meets-resistance-as-politicians-seek-to-protect-aib-and-boi-36072622.html

The insane interest rate we have in Ireland will stay, think it is a levy to keep bailing out AIB and BoI....

I would love to cut 250 Eurp a month of my monthly outgoings:
http://www.independent.ie/business/personal-finance/property-mortgages/mortgage-holders-here-pay-250-more-than-eu-average-each-month-36024788.html

Can anyone explain to me why we have this situation? What is the banks excuse? Where is the Consumer Protection Commission?

If the Irish banks are making such huge profits that you are intimating in your post, can I ask you why you think no foreign banks are queuing up to do business here (ignoring the gutter press article above, the government cannot stop any European bank doing business here). ? And in fact, why several large foreign banks have left our shores?
The answer to me at least is pretty obvious.

BTW, my mortgage interest rate is 1.15%, so not sure how that is 'insane'?

Tar.Aldarion

Lumen wrote: »

snip cool graphs and figures

Dunno now, research at the time but could be off after 6 years. Did a quick google and here is somebody that was saying similar
http://www.ronanlyons.com/2011/08/30/top-ten-facts-in-relation-to-ireland%E2%80%99s-mortgage-debt-arrears/

As of June this year, Ireland has 777,000 residential mortgages worth €115bn. Of these, 40,000 (or just over 1 in 20) are in arrears of greater than six months. This figure has doubled in 18 months, as it was 19,000 in late 2009.
These 40,000 mortgages in arrears of more than six months are worth €8bn in total, but the arrears on them is worth less than €1bn. Court proceedings have been issued on 3,000 mortgages, a smaller number now than two years ago.
There have been a total of 500 repossessions in the last twelve months. The majority (two thirds) of these have been “voluntary surrenders”, i.e. abandoned properties. There were 56 Court-ordered repossessions in the second half of 2010 and 103 in the first half of 2011.
During 2010 in the UK, there were 36,300 repossessions, according to the Council of Mortgage Lenders. If the same rate of repossessions had applied in Ireland over the last 12 months, we would have seen 2,300 repossessions – i.e. about fifteen times the rate of Court-ordered repossessions that we have seen in the last 12 months.
Irish banks gave out 673,000 mortgages between the start of 2005 and the end of 2008, the period most likely to contain the bulk of those in arrears. About 225,000 of these were either people switching lender or top-up mortgages. Of the remaining 450,000, 88,000 were investment mortgages, 145,000 were mover-purchaser, while 125,000 were first-time buyer mortgages.
Ireland’s banks have given out 35,000 mortgages in the last eighteen months. At the same time, the number of mortgages has fallen by almost 16,000. This means that over 50,000 people have paid off their mortgage since the end of 2009, compared to the 20,000 who have slipped into arrears of six months of more during the same period.
Between 2005 and 2008, one in six first-time buyers had a deposit of more than 30%, while one in five borrowed at 100%. Looking at the market as a whole, just under 40% of all mortgages taken out were at less than 70% loan-to-value.
Someone who borrowed a mortgage of €300,000 in early 2006 and who has not missed a payment will, by the end of this year, have typically paid off about 13% of their principal, meaning their loan outstanding is about €260,000. A deposit of more than 30% means the home would have been valued at €450,000 or more. Such a home would now command an asking price of about €225,000. By the end of 2015, the principal outstanding would be about €220,000.
Two million people were employed in Ireland in late 2006. 1.77 million were employed in early 2011, which means that about seven of every eight people who were at work in the boom are still at work.
The 1.43 million households in the State in the 2006 Census were estimated to be worth €526bn collectively in early 2007. This had fallen to €289bn by mid-2011. Housing stock built since 2006 is worth approximately €42bn. To calculate net housing wealth in Ireland, mortgage liabilities of €115bn must be subtracted from the €330bn of residential housing assets, giving a figure of about €215bn. In other words, Ireland’s current “loan-to-value” is about 35%.

Lumen

Tar.Aldarion wrote: »

Dunno now, research at the time but could be off after 6 years. Did a quick google and here is somebody that was saying similar
http://www.ronanlyons.com/2011/08/30/top-ten-facts-in-relation-to-ireland%E2%80%99s-mortgage-debt-arrears/

OK, well returning to the point earlier about the difficulty of repos, from the data linked I get a total of 2.5k PDH repos since Sept 2009, over which eight year period we've gone from 64k arrears cases outstanding to 76k arrears cases outstanding.

Why would any sane institution want to join that party?

Cuddlesworth

Lumen wrote: »

Why would any sane institution want to join that party?

The better question would be, whats going to happen in the next crash?

Lumen

Cuddlesworth wrote: »

The better question would be, whats going to happen in the next crash?

Bank run.

smurgen

1641 wrote: »

Inefficient ? Yet we complain when banks cut costs - cutting staff, closing branches, restricting services at branches, etc.

Couldn't give a fiddlers about irish banks.i'm with kbc.irish banks are inefficient because they're a proctected species.how about we open up the market and see what they're made of?

dev100

It's a cartel operation here. It's made to look difficult to operate. Too many banks here leads to competition and leads to lower yields. Look at how the banks lobbied to have the government cut the interest rate on An Post saving schemes.

koheim

Deagol wrote: »

If the Irish banks are making such huge profits that you are intimating in your post, can I ask you why you think no foreign banks are queuing up to do business here (ignoring the gutter press article above, the government cannot stop any European bank doing business here). ? And in fact, why several large foreign banks have left our shores?
The answer to me at least is pretty obvious.

BTW, my mortgage interest rate is 1.15%, so not sure how that is 'insane'?

Read the article! "The rate on all new agreements, fixed and variable, stood at 3.3pc. The equivalent eurozone rate was 1.83pc."

The Irish bank cartel are doing a great job!

Allinall

koheim wrote: »

Read the article! "The rate on all new agreements, fixed and variable, stood at 3.3pc. The equivalent eurozone rate was 1.83pc."

The Irish bank cartel are doing a great job!

The article is rubbish.

Theees no barrier to any foreign bank setting up here and offering mortgages at whatever rates they like, as long as they stay within Central Bank guidelines .

As I said earlier, European banks are leaving the Irish market.

The risks are too high.

All talk of cartels and government protection of Irish banks is tin foil hat stuff.

smurgen

Allinall wrote: »

The article is rubbish.

Theees no barrier to any foreign bank setting up here and offering mortgages at whatever rates they like, as long as they stay within Central Bank guidelines .

As I said earlier, European banks are leaving the Irish market.

The risks are too high.

All talk of cartels and government protection of Irish banks is tin foil hat stuff.

What banks?have links?

koheim

Allinall wrote: »

The article is rubbish.

Theees no barrier to any foreign bank setting up here and offering mortgages at whatever rates they like, as long as they stay within Central Bank guidelines .

As I said earlier, European banks are leaving the Irish market.

The risks are too high.

All talk of cartels and government protection of Irish banks is tin foil hat stuff.

Fact is: "The rate on all new agreements, fixed and variable, stood at 3.3pc. The equivalent eurozone rate was 1.83pc."

Irish banks make massive profits compared to Eurozone banks, so don understand how they get away with the overcharging.

1641

dev100 wrote: »

It's a cartel operation here. It's made to look difficult to operate. Too many banks here leads to competition and leads to lower yields. Look at how the banks lobbied to have the government cut the interest rate on An Post saving schemes.

They are really State (NTMA) saving schemes - An Post are only agents. Yes, their rates were artificially high. The NTMA are raising money for the state in Bonds at much lower rates than they are by their offering on these products. And the artificially high rates were sucking money out of banks and other institutions. There is over €3.1 billion in Prize Bonds alone. How did the NTMA rates compare to interest rates elsewhere in the eurozone?

Allinall

smurgen wrote: »

What banks?have links?

Don't have links.

Bank of Scotland left a few years ago.

Nationwide U.K. Ireland are pulling out this year.

Rabbo Direct are virtually non existent heee anymore.

As I said, they're not prepared to take the risks associated with the Irish market.

Browney7

Allinall wrote: »

Don't have links.

Bank of Scotland left a few years ago.

Nationwide U.K. Ireland are pulling out this year.

Rabbo Direct are virtually non existent heee anymore.

As I said, they're not prepared to take the risks associated with the Irish market.

Nationwide and Rabo didn't sell mortgages here so hardly a fair comparison

Cookie_Monster

koheim wrote: »

Fact is: "The rate on all new agreements, fixed and variable, stood at 3.3pc. The equivalent eurozone rate was 1.83pc."

Irish banks make massive profits compared to Eurozone banks, so don understand how they get away with the overcharging.

you're assuming though that Irish banks can borrow at the same rates as those Euro banks, I wouldn't be so sure they can because 1) scale and 2)market risk. They're smaller than many of the EU banks so will have to pay more for capital and the market risk in Ireland is higher so have to pay more for capital.

Allinall

Browney7 wrote: »

Nationwide and Rabo didn't sell mortgages here so hardly a fair comparison

I wonder why?

Wompa1

Lumen wrote: »

OK, well returning to the point earlier about the difficulty of repos, from the data linked I get a total of 2.5k PDH repos since Sept 2009, over which eight year period we've gone from 64k arrears cases outstanding to 76k arrears cases outstanding.

Why would any sane institution want to join that party?

You did a great job of laying things out. What your figures show has been something I have been thinking for a few years now. We're in a very precarious position. In most other nations, people would have had their properties repossessed and while you'd never want that to happen in an ideal world, it is required to bring a natural financial order.

smurgen

Allinall wrote: »

I wonder why?

Talk about moving the goalposts. Tell me this...why did kbc enter the market during a period of turmoil and why do they continue to work here if it's as unattractive and you portray it to be?

wordofwarning

Allinall wrote: »

I wonder why?

The info is easily available online if you are concerned about it

They set up here to get deposits for their home operations ie the Netherlands and UK.

Why would they wanted to have set up operations here for giving mortgages when we had one of the most competitive mortgage markets in the EU a decade ago

1641

smurgen wrote: »

. Tell me this...why did kbc enter the market during a period of turmoil

From Wiki :

It was established in 1973 as Irish Intercontinental Bank. In 1978 KBC Bank, which is headquartered in Brussels, acquired a 75% interest. KBC Bank acquired a full 100% shareholding in IIB in 1999, and in 2000 changed the bank's name to IIB Bank. On 27 October 2008, the 30th anniversary of KBC's full ownership, the bank was renamed KBC Bank Ireland plc.

smurgen

1641 wrote: »

smurgen wrote: »

. Tell me this...why did kbc enter the market during a period of turmoil

From Wiki :

It was established in 1973 as Irish Intercontinental Bank. In 1978 KBC Bank, which is headquartered in Brussels, acquired a 75% interest. KBC Bank acquired a full 100% shareholding in IIB in 1999, and in 2000 changed the bank's name to IIB Bank. On 27 October 2008, the 30th anniversary of KBC's full ownership, the bank was renamed KBC Bank Ireland plc.

Loads of banks establish here.when did they start offering mortgages here?

1641

What banks?have links?

Bank of Scotland (Ireland)

ACC (owned by Rabo - mortgage arm in Ireland)

Danske Bank (formerly known as northern Bank)

Re KBC -KBC began operating a branch network in 2012 [1] with a further build-out in 2014 [2]. This follows the exit of Halifax Ireland and Danske Bank from the Irish retail market, with some branches being located in former locations of those banks.(WIKI)

smurgen

Wompa1 wrote: »

You did a great job of laying things out. What your figures show has been something I have been thinking for a few years now. We're in a very precarious position. In most other nations, people would have had their properties repossessed and while you'd never want that to happen in an ideal world, it is required to bring a natural financial order.

other nations didn't have the biggest bank bailout in history relative to gdp.
the irish banks are too big relative to the size of the country and the government should do all they can to facilitate new foreign entrants to the market here. the last collapse of our lovely domestic banks still costs us thousands each in the form of USC and on top of that we should pay them extra for our mortgages too?!
Shrink AIB/BOI and all the other Irish banks until they're small enough to fail.