2021 Irish Property Market chat - *mod warnings post 1*

schmittel wrote: »

I'm quite happy to say it:

Our lack of repossessions is the primary factor causing our interest rates to be higher than other eurozone countries.

Simply false.

SmokyMo wrote: »

Simply false.

Have you any evidence to back up your theory be interested to know what is shaping your POV

munstergirl wrote:

Don't know if Limerick council are buying private properties at the moment, they bought a lot during regeneration, that was a few years ago.

30+ homes in mungret development recently through ahb. Thread on it on the limerick forum here

PropQueries wrote: »

As someone else mentioned, we have a lot of problems to tick off before such a policy should be entertained and I don't believe for one moment that any potential savings would be passed onto mortgage holders.

We have just had two bank decide to pull their operations in Ireland meaning there is very little competition in the market, I think it is a pretty big issue, we need more banks in order to have lower rates.

Its an interesting article, 70% are at least somewhat in favour of a tougher stance, and that was asked before KBC announced they left the market, it could well be more now.
I think it is probably another case of those against being very loudspoken and given far more media time than they deserve making it seem far more are against it than really are.

Even a small change could probably make a big difference in that if a significant number of long term arrears were repossessed it would likely lead to a decrease in arrears from a lot of others who are choosing not to pay rather than don't have the ability.

cruizer101 wrote: »

We have just had two bank decide to pull their operations in Ireland meaning there is very little competition in the market, I think it is a pretty big issue, we need more banks in order to have lower rates.

Its an interesting article, 70% are at least somewhat in favour of a tougher stance, and that was asked before KBC announced they left the market, it could well be more now.
I think it is probably another case of those against being very loudspoken and given far more media time than they deserve making it seem far more are against it than really are.

Even a small change could probably make a big difference in that if a significant number of long term arrears were repossessed it would likely lead to a decrease in arrears from a lot of others who are choosing not to pay rather than don't have the ability.

I do get the arguments.

I wonder has anyone found any research that breaks down why our mortgage rates are so high relative to other EU countries.

For example, what percentage of our mortgage rates are due to:

1. Tracker mortgages.
2. Higher capital requirements because the ECB possibly believes that our housing market is grossly overvalued.
3. The banks own pay and pensions.
4. Banks just charging what they can get away with.
5. The difficulties in repossessing properties.

I'm not sure the last one is as big an issue as it was now that the funds have purchased many of the non-performing mortgages off the banks.

Would look like a great win for those funds if we did introduce repossession laws similar to the UK etc.

And if rates do go down, would that just lead to higher house prices? i.e. the funds win on the double.

Or, it could work in reverse. With easier repossessions, the funds could flood the market with property which could lead to a collapse in house prices, which would justify the higher capital requirements to begin with

PropQueries wrote: »

2. Higher capital requirements because the ECB possibly believes that our housing market is grossly overvalued.

That's not why capital requirements are higher.

fliball123 wrote: »

Have you any evidence to back up your theory be interested to know what is shaping your POV

I answered previously that mortgage arrears are under 5% of total mortgage accounts. So cannot be a leading factor in mortgage rates.

https://www.centralbank.ie/docs/default-source/statistics/data-and-analysis/credit-and-banking-statistics/mortgage-arrears/residential-mortgage-arrears-and-repossession-statistics-december-2020.pdf?sfvrsn=4

schmittel wrote: »

What do you think is the primary factor in our higher interest rates?

Capital requirements, plus a number of other technical financial regulations brought in after 08.
Biggest problem is that CB forces this to be applicable to all banks who want to operate in Ireland.

awec wrote: »

5% is quite high, no?

Like it would mean on a street of 20 houses, 1 is in arrears.

Sorry should ve added arrears by 90 days or more. This stats was taken for 2020, during pandemic. Total number of arrears is trending down so that means there is less and less people in arrears while we have had higher and higher mortgage withdrawal.

In addition if higher interest rates were driven primarily by inability to reposes then banks would only lend to financially secure people. But their choice is to pull out of the market completely indicates that issue is somewhere else. Meaning they can utilize their capital better (generate more profit) in different market, where there is lower capital reqs.