Originally Posted by koheim
It seems like most people are defending the Bank's high interest rates, and I do not understand why. Cheaper credit would benefit everyone. Also, the Banks were actually bailed out already for the mistakes they did pre 2009, I doubt that there are many mortgages starting after 2009 in Arrears?. The pre 2009 has been dealt with in the bail out, but still Banks are using this excuse to collectivly (like a cartel) keeping morgage interest rates artificial high, it is like an extra tax at this stage.
We're not defending Irish banking institutions high interest rates- we're explaining them- there is a vast difference.
I could get a mortgage tomorrow in any other EU country- at a lower interest rate than here- because the cost of lenders doing business here- is so much higher- particularly when you factor non-performing loans into the equation- than in any other EU country.
Even now- we have 10% of all mortgages in an impaired state- versus a 'normal' level of between 3 and 4% (and this is despite instructions from the ECB to get our houses in order).
Bank valuations are going up- and shareholders have a reasonable expectation of getting a return on their investment.
Keeping 10% of non-performing loans on their balance sheets- has a cost- a cost that the good customers of Irish financial institutions have to pay.
If you want Irish interest rates to come down- it implies you normalise banking practices in this country- which implies vastly loosening the ability of lenders to repossess properties with non-performing loans in lien on them- and in the case of the residential letting sector- vastly enhancing the ability of landlords to gain vacant possession of properties with overholding tenants (regardless of whether, or not, they are paying their rent).
The high cost of loans in Ireland- is a direct response of government action in Ireland- which safeguards people in their homes, both owners and tenants- regardless of whether or not they are paying their way. Thats all well and good- however, there is a cost associated with this- a cost that the normal borrowers of this country are forced to pay.