KBC rates in Belgium vs KBC rates in Ireland

[Sarenco]

Hi Visigoth

Just to follow up on a few points:

According to daft, nationwide asking prices fell 2% in Q3 2007 and a further 10.7% in the following 12 months (see the Q3 2007 and Q3 2008 reports). Averages certainly don't give you the full picture but by August 2008 we were definitely well past the peak asking prices of the bubble years, never mind clearing prices.

Yes, the bank certainly has an interest in ensuring that its collateral is appraised correctly but neither the bank nor its appraiser is "on your side". The bank is your financial counterpart - put crudely, the bank's interest is to make money from you. The fact that you were required to discharge the appraiser's fees as a condition of your loan doesn't change the fact that the appraiser was acting on behalf of the bank.

On US mortgage rates, frankly I think it is highly improbable that your friend got a 20-year fixed rate mortgage at anything like 1.65% when you can lend money today to the US Treasury (with effectively zero default risk) for the same period at 2.67%! Even the most creditworthy borrower in the US, with a large downpayment, would be doing well to secure a 20-year fixed rate home loan at less than 4% - take a look at www.bankrate.com for examples of the best rates currently available in the US.

 

[Sarenco]

Sarenco, and another point. I certainly support your ideas about imposing caps of some kind expressed elsewhere but not sure how one can translate these ideas into actual governmental policy if they are not listening. I take it "Sarenco" is not minister Noonan's alias. Then the only solution is to inhibit Noonan dreams like in The Inception movie and plant the idea of caps on SVRs, I can't really see anything more realistic

Hah! No, I've no connection with the Minister (or any politicians for that matter).

Have you completely discounted the idea of fixing your rate? A two year fix @3.75% looks like a reasonable deal to me for a borrower in negative equity.

 

[visigoth]

Sarenco, hi.

Like I said, I know it now about the bank(s). But even if their only interest is to make money from the customer, you would have thought they would be more conservative and savvy about it, don’t you think? The bank is not only to make money but is also to account for the risk, especially if they enter 25-35 y relationships with customers, it is not about scoring quickly. Surely the risks are minimized if they offer affordable mortgages and have houses appraised conservatively. They also have better market information than their customers. We now know that in late 2007 early 2008 the banks knew. If customers default because they end up with unaffordable mortgages, banks’ shareholders are to suffer also, so it is not only making money but making it in a prudent manner.

What happened in 2004-8 was not unavoidable, and I find it inexcusable that they turned “normal” Ireland into Florida for no good reason, the banks attracted too much speculative capital from UK, US, and offshore (google Philip Lane’s recent paper, The Funding of the Irish Domestic System during the Boom - loosened the lending standards and indebted the Irish people to unreasonable levels. What is the public good, who benefits? In your posts your line is that what happened, happened, contracts are signed, lets move on. But it is very convenient and I find it difficult to move on without some reckoning, e.g., of banks offering lower rates to customers they screwed. People buy houses across the world, there is nothing peculiar about Ireland, I think the sentiment that the Irish people are somehow more obsessed with it is patronizing. The bank credit itself was the primary engine behind house prices, without credit “greedy” people would not have been able to buy at those prices. But perhaps it is pointless to continue this discussion, the original thread was on KBC rates, and I apologise for going sideways here. We indeed need to move on, and I would have welcomed govt regulation on rates of some kind.

Now, you asked about US rates. I kid you not, I looked up my emails and they indeed had 1.65% rate albeit not right now but a year and a half ago (same 0% fed rate then though) and for 15 year term not 20 years, from chase. And their parameters would have been quite similar, i.e., not very large LTV but good credit history. I am not entirely sure about the logic of having rates below treasury bonds I am as perplexed here. Perhaps they securitize and aggregate low-yield secure ones with higher interest less secure ones? Dunno. But you saw another thread that the Spanish banks still have trackers in 2015 even though now they know how low they can be. Weird.

 

[visigoth]

Hah! No, I've no connection with the Minister (or any politicians for that matter).

Have you completely discounted the idea of fixing your rate? A two year fix @3.75% looks like a reasonable deal to me for a borrower in negative equity.

I did not discount the idea of fixing the rate with BOI entirely. First, however, as I explained earlier somewhere, they misled me what SVR entailed and I find it difficult to trust them in general. Probably all banks are like that, I am not naïve. Therefore second, and main reason, I just do not appreciate their arrogance. If they simply reduced their SVR from 4.5 to 4.2 as a gesture of good will, I would have probably fixed. But I really dislike their attitude of taking NE/high LTV customers for granted, that we have no choice but to fix with them. It robbed me the wrong way. Like they keep their SVR artificially high and signpost fixed rates much lower, too blatant. Perhaps I can raise some money and switch though.