Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie
Hi there,
There is an issue with role permissions that is being worked on at the moment.
If you are having trouble with access or permissions on regional forums please post here to get access: https://www.boards.ie/discussion/2058365403/you-do-not-have-permission-for-that#latest

What US banks and Irish mortgage holders have in common.

  • 11-12-2023 11:38am
    #1
    Registered Users, Registered Users 2 Posts: 4,138 ✭✭✭


    Warren Buffett recently bought three large house building firms in the US. So obviously he expects strong demand for new houses to continue in the US. Here in Ireland, demand is also strong for new houses because just like in the US, government interference and manipulation in the market means it makes more sense from a value perspective to buy a new house.

    But there is a very important difference between the US and Irish housing markets. In the US, mortgage buyers had the option to fix their mortgage for the long term when interest rates were very low. That was not really the case and certainly not the culture here in Ireland. People may have fixed their mortgage payments for four or five years but not for the long term.

    As interest rates increased, small lenders in the US got into difficulty as those they had given loans to had fixed mortgages while the bonds the banks had invested in lost value. Because Irish mortgage holders had mostly tracker, variable or short term fixed mortgages, our banks could charge our mortgage holders more so just like the small banks in the US, Irish mortgage holders found the going harder as interest rates increased.

    The question now is what happens next. Have the central banks won the fight against inflation? If they have, will they lower rates? If they lower rates, what will that do to inflation? If the central banks sit tight and do nothing, which way will inflation go? If inflation goes nowhere, will people look for pay rises to ease the burden and what effect will that have?



Advertisement