# More repossessions will not lead to lower mortgage rates



## Jimmy s (5 Jul 2019)

Well done David. Its because of the likes of David that there hasn't been an avalanche of repossessions and anyone who thinks the banks wouldn't do it if they could get away with it are for the birds. By the way only massive profits   still no massive relief for svr.  Talks of bonus and wages increases and bonus payments a joke.


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## Leo (5 Jul 2019)

Jimmy s said:


> By the way only massive profits still no massive relief for svr.



More repossessions or lower SVR? Pick one, you can't have both.


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## Jimmy s (5 Jul 2019)

Leo said:


> More repossessions or lower SVR? Pick one, you can't have both.


The point is more repossessions  won't lead to lower svr  just extra tax free profits,and higher bonus payments. Some people are two wo rried about others getting a better deal than them instead of been happy with their lot. Don't have banks divde and conquer methods work


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## The Horseman (5 Jul 2019)

That's a ridiculous comment. If repossessions increased other banks might enter the market and encourage competition. New competition won't enter the market if they can't repossess a property where people are not paying the mortgage.


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## Leo (5 Jul 2019)

Jimmy s said:


> The point is more repossessions  won't lead to lower svr  just extra tax free profits,and higher bonus payments. Some people are two wo rried about others getting a better deal than them instead of been happy with their lot. Don't have banks divde and conquer methods work




Much like Hall's arguments, that doesn't make a lot of sense. Are you suggesting there is no correlation between very high consumer protections and  extremely low levels of repossessions here on the interest rates being charged?


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## Jimmy s (5 Jul 2019)

Competition among cartels?  Do you think the banks have been punished enough for years of stealing? ie tracker scandel.


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## Jimmy s (5 Jul 2019)

Leo said:


> Much like Hall's arguments, that doesn't make a lot of sense. Are you suggesting there is no correlation between very high consumer protections and  extremely low levels of repossessions here on the interest rates being charged?


Yes  already performing banks have now the cheek to mention raises and bonus payments instead of reducing svr.  These are now tax free profits which should be used to reduce rates instead of trying to blame the people who are behind of which I'm sure 90% are genuinely less well off


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## cremeegg (5 Jul 2019)

Jimmy s said:


> of which I'm sure 90% are genuinely less well off



All public policy should be based supporting those who some anonymous internet poster thinks are "90% are genuinely less well off".

Oh it already is, sorry


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## Gordon Gekko (5 Jul 2019)

Jimmy s said:


> Talks of bonus and wages increases and bonus payments a joke.



Why? We’re all shareholders in some of the banks. I have a major issue with the fact that they’re struggling to attract, retain, and motivate talent.


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## Jimmy s (5 Jul 2019)

cremeegg said:


> All public policy should be based supporting those who some anonymous internet poster thinks are "90% are genuinely less well off".
> 
> Oh it already is, sorry





Gordon Gekko said:


> Why? We’re all shareholders in some of the banks. I have a major issue with the fact that they’re struggling to attract, retain, and motivate talent.


The armed services are struggling with staff due to low wages Bank staff from management up are paid more than enough for what they do if they are not happy get rid


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## The Horseman (5 Jul 2019)

To break a cartel you encourage competition this is basic economics. The more suppliers you have in a market the less power a single or group of suppliers has in controlling the market. 

It never ceases to amaze me how so many people don't understand the basic fundamentals of economics.


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## Jimmy s (5 Jul 2019)

cremeegg said:


> All public policy should be based supporting those who some anonymous internet poster thinks are "90% are genuinely less well off".
> 
> Oh it already is, sorry


Cremeegg you are the perfect example too worried about what everyone else has and is getting. The ironic think is you are jealous of the poorer


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## Jimmy s (5 Jul 2019)

The Horseman said:


> To break a cartel you encourage competition this is basic economics. The more suppliers you have in a market the less power a single or group of suppliers has in controlling the market.
> 
> It never ceases to amaze me how so many people don't understand the basic fundamentals of economics.


At least we are agreed it's a cartel


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## The Horseman (5 Jul 2019)

I did not say it was. I simply explained how the laws of economics deal with cartels.


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## Gordon Gekko (5 Jul 2019)

There are people who earn X by way of salary and Y by way of bonus if they do a really good job and make money for their employer.

In order to attract those people and circumvent the rules, certain banks are simply paying them salaries equal to X plus Y. It’s fine once the salary doesn’t exceed €500,000.

How can that we in the best interests of the shareholder, i.e. us?


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## The Horseman (5 Jul 2019)

You need to pay to attract the best. The taxpayer is the shareholder and the higher the value of a share the better the return for the taxpayer when the shares are sold. 

These costs must be paid from income hence the higher interest rates.

We can't have it both ways ie low interest rates, low income and the best staff. You get what you pay for. You have to pay to attract the best.


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## NoRegretsCoyote (5 Jul 2019)

Irish banking has some features of an oligopoly.

There has to be explicit, concious price-fixing for a cartel to exist though.

Irish banking is nor a cartel.


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## Zenith63 (5 Jul 2019)

Jimmy s said:


> Well done David. Its because of the likes of David that there hasn't been an avalanche of repossessions and anyone who thinks the banks wouldn't do it if they could get away with it are for the birds.


I’m curious whether you think it’s OK for people to borrow money, sign a contract to pay it back and then not do so, or if you think there’s another solution other than repossessions to incentivise good behaviour? Ignoring the issue of bonuses and all that stuff.


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## noproblem (5 Jul 2019)

The Horseman said:


> You need to pay to attract the best. The taxpayer is the shareholder and the higher the value of a share the better the return for the taxpayer when the shares are sold.
> 
> These costs must be paid from income hence the higher interest rates.
> 
> We can't have it both ways ie low interest rates, low income and the best staff. You get what you pay for. You have to pay to attract the best.



Well, we all saw what paying to attract the best got us a few years ago. Some of them in jail, some miraculously escaped it, some have mystery illness's and cat't remember things, etc, etc, etc. As a certain financier said of late, Ireland is the country that just keeps giving.


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## Jimmy s (5 Jul 2019)

Zenith63 said:


> I’m curious whether you think it’s OK for people to borrow money, sign a contract to pay it back and then not do so, or if you think there’s another solution other than repossessions to incentivise good behaviour? Ignoring the issue of bonuses and all that stuff.


No I'm not but what's done is done if these people now have no ability to pay they have to be let live. Its within reason to think a lot of these mortgages should not have been given out. Id have no problem with their ownership been revoked but no eviction the mistake is already made. A fair rent or mortgage  in relation to their income to but owning a percentage of what they pay for.


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## Jimmy s (5 Jul 2019)

The Horseman said:


> You need to pay to attract the best. The taxpayer is the shareholder and the higher the value of a share the better the return for the taxpayer when the shares are sold.
> 
> These costs must be paid from income hence the higher interest rates.
> 
> We can't have it both ways ie low interest rates, low income and the best staff. You get what you pay for. You have to pay to attract the best.


I don't get how you think banking staff from management up are not paid enough. Judging ability to repay  is far from rocket science. They have not reinvented the wheel, they are not creating  any extra or primary wealth. Mistakes are absorbed and no one pays the piper I mean talk about easy street. Overpaid and run for cover pass the buck that's all that springs to mind.


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## NiallSparky (6 Jul 2019)

Jimmy s said:


> I don't get how you think banking staff from management up are not paid enough. Judging ability to repay  is far from rocket science. They have not reinvented the wheel, they are not creating  any extra or primary wealth. Mistakes are absorbed and no one pays the piper I mean talk about easy street. Overpaid and run for cover pass the buck that's all that springs to mind.



You don't really seem to have a decent grasp of what banks do. It's not exclusively retail mortgage lending.


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## Dazzler123 (6 Jul 2019)

Jimmy s said:


> No I'm not but what's done is done if these people now have no ability to pay they have to be let live. Its within reason to think a lot of these mortgages should not have been given out. Id have no problem with their ownership been revoked but no eviction the mistake is already made. A fair rent or mortgage  in relation to their income to but owning a percentage of what they pay for.



How do you revoke ownership but allow people to remain in the property?  Who owns the property when ownership is revoked ?  What happens when they refuse to pay the rent or fair mortgage?  Anyone who is still in trouble since the crash has had plenty of opportunity to resolve their loans but have failed to do so. Those people will not cooperate with such schemes


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## Jimmy s (6 Jul 2019)

NoRegretsCoyote said:


> Irish banking has some features of an oligopoly.
> 
> There has to be explicit, concious price-fixing for a cartel to exist though.
> 
> Irish banking is nor a cartel.





NiallSparky said:


> You don't really seem to have a decent grasp of what banks do. It's not exclusively retail mortgage lending.


I never mentioned mortgage I presume you  are not just adding business loans and basic  banking including foreign exchange


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## The Horseman (6 Jul 2019)

Jimmy s said:


> I don't get how you think banking staff from management up are not paid enough. Judging ability to repay  is far from rocket science. They have not reinvented the wheel, they are not creating  any extra or primary wealth. Mistakes are absorbed and no one pays the piper I mean talk about easy street. Overpaid and run for cover pass the buck that's all that springs to mind.



A mortgage is a contract to borrow an amount and pay it back. Judging peoples ability to pay is based on the evidence supplied to get the loan.

Borrowers fabricated their incomes, went to multiple banks, got multiple loans and never told the banks about the multiple loans they had.

Hence the reason for the Central Credit Agency. Now we know what debts people have when they apply for loans.

You need a functioning banking system for an economy to work. This is the reason the banks were bailed out.

I did not say staff are or are not paid enough, you did. Again I just explained if you want the best you have to pay to attract them.

The "piper" was paid. The value of bank shares fell to almost nothing. Warren Buffet bought BOI shares for 10c each. These shares were trading at €15 to €18 at one stage.


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## Jimmy s (6 Jul 2019)

Dazzler123 said:


> How do you revoke ownership but allow people to remain in the property?  Who owns the property when ownership is revoked ?  What happens when they refuse to pay the rent or fair mortgage?  Anyone who is still in trouble since the crash has had plenty of opportunity to resolve their loans but have failed to do so. Those people will not cooperate with such schemes


Most people will pay what they can afford. Get over it it won't make banks reduce svr they will only increase profits. The banks still haven't learned from the great tracker mortgage robbery and have had enough support from the people instead of trying to divide them


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## The Horseman (6 Jul 2019)

The loans are still owed to somebody. Its not owed to the bank its owed to people who have money on deposit with the bank. 

You know every ordinary person who has a bank account with their wages in it, their savings for a car or a holiday or for a deposit for a house.


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## Jimmy s (6 Jul 2019)

[Q
a lot of bank staff facilited the fabricated wages in fact they gave them new jobs. I presume your joking about share price been punishment to banking malpractices,collusion and daylight robbery of people working in the banks 
UOTE="The Horseman, post: 1618035, member: 100185"]

[/QUOTE]
Are you joking me the value of shares falling what's that got to do with not having more of the bankers in jail


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## Jimmy s (6 Jul 2019)

Jimmy s said:


> [Q
> a lot of bank staff facilited the fabricated wages in fact they gave them new jobs. I presume your joking about share price been punishment to banking malpractices,collusion and daylight robbery of people by the banks
> UOTE="The Horseman, post: 1618035, member: 100185"]


Are you joking me the value of shares falling what's that got to do with not having more of the bankers in jail
[/QUOTE]


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## Jimmy s (6 Jul 2019)

The Horseman said:


> The loans are still owed to somebody. Its not owed to the bank its owed to people who have money on deposit with the bank.
> 
> You know every ordinary person who has a bank account with their wages in it, their savings for a car or a holiday or for a deposit for a house.


The ordinary person  you are talking about are guaranteed up to 100000 the low percent after that im sure are well covered between property, gold   and fire proof boxes


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## Dazzler123 (6 Jul 2019)

Jimmy s said:


> Most people will pay what they can afford. Get over it it won't make banks reduce svr they will only increase profits. The banks still haven't learned from the great tracker mortgage robbery and have had enough support from the people instead of trying to divide them



I admire your optimism... but the nearest thing to your idea for people paying what they can afford is council rents.  Figures in 2016 showed that over 20% of council tenancies are in arrears... that is a means tested payment that is tailored to the individuals ability to pay and yet there is massive arrears. Your idea simply will not work and has been shown ro not work.

The tracker scandal and other alleged wrongs of the "banksters" are not relevant to the obligation on a person to pay their mortgage.


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## Jimmy s (6 Jul 2019)

Dazzler123 said:


> I admire your optimism... but the nearest thing to your idea for people paying what they can afford is council rents.  Figures in 2016 showed that over 20% of council tenancies are in arrears... that is a means tested payment that is tailored to the individuals ability to pay and yet there is massive arrears. Your idea simply will not work and has been shown ro not work.
> 
> The tracker scandal and other alleged wrongs of the "banksters" are not relevant to the obligation on a person to pay their mortgage.


This is going to cost one way or another if we can get up to 80 percent of holders in arrears paying what they can afford  we would have done well. Let's work with these people and show them the light if they are still holding part ownership I believe even more will follow


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## The Horseman (6 Jul 2019)

Who do you think is underwriting this guarantee?


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## AlbacoreA (6 Jul 2019)

Dazzler123 said:


> ....
> The tracker scandal and other alleged wrongs of the "banksters" are not relevant to the obligation on a person to pay their mortgage.



Except we are implying a moral imperative to pay the mortgage. But not to the banks activities. 

In some places you can hand back the keys. We don't have that here. Which would change how this business is handled. Especially how banks often refuse to negotiate.


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## Dazzler123 (6 Jul 2019)

Jimmy s said:


> This is going to cost one way or another if we can get up to 80 percent of holders in arrears paying what they can afford  we would have done well. Let's work with these people and show them the light if they are still holding part ownership I believe even more will follow



Its a nice idea but i)banks are not charities and ii) the banks have attempted to work with these people already.  For years given that many of these people have been i  arrears since the crash


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## galway_blow_in (6 Jul 2019)

The Horseman said:


> A mortgage is a contract to borrow an amount and pay it back. Judging peoples ability to pay is based on the evidence supplied to get the loan.
> 
> Borrowers fabricated their incomes, went to multiple banks, got multiple loans and never told the banks about the multiple loans they had.
> 
> ...



Don't think buffet bought shares in any Irish bank. 

Wilbur Ross did


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## Dazzler123 (6 Jul 2019)

AlbacoreA said:


> Except we are implying a moral imperative to pay the mortgage. But not to the banks activities.
> 
> In some places you can hand back the keys. We don't have that here. Which would change how this business is handled. Especially how banks often refuse to negotiate.


00
There is a moral imperative to repay a loan, irrespective of the banks activities.  If the bank has misbehaved the cbi and fspo are there to address that.  The answer is not to renege on your loan.

Handing back the keys happens all the time here. That just deals with the security for the loan. Not the loan itself. Its reasonable for the bank to want their money back. The fact is that they generally dont however


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## cremeegg (6 Jul 2019)

Jimmy s said:


> Cremeegg you are the perfect example too worried about what everyone else has and is getting.



My point is that public policy should be rules based and not based on whoever can gain sympathy for their plight.

Your comment


Jimmy s said:


> I'm sure 90% are genuinely less well off


reflects nothing but your own subjective opinion, which is no basis for the formation of public policy. Your opinion or anyone else's.



Jimmy s said:


> The ironic think is you are jealous of the poorer


I will ignore your personal observation as you are new here.


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## Jimmy s (6 Jul 2019)

cremeegg said:


> My point is that public policy should be rules based and not based on whoever can gain sympathy for their plight.
> 
> Your comment
> 
> ...


My point also is it should be rules based just not what's in place. My sympathy certainly doesn't lie with the banks who now even though are posting huge tax free profits can still sow an idea of repossessions equaling lower svr rates. Public policy was an option at some stage


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## The Horseman (6 Jul 2019)

My bad





galway_blow_in said:


> Don't think buffet bought shares in any Irish bank.
> 
> Wilbur Ross did


 My bad


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## Jimmy s (6 Jul 2019)

Jimmy s said:


> My point also is it should be rules based just not what's in place. My sympathy certainly doesn't lie with the banks who now even though are posting huge tax free profits can still sow an idea of repossessions equaling lower svr rates. Public policy was an option at some stage


Sorry opinion not option


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## Jimmy s (7 Jul 2019)

Why haven't the banks used their profits to reduce svr instead of using excuses and lack of evictions as a reason not to reduce rates remembering its the extra charges  creating profits.


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## 24601 (7 Jul 2019)

Jimmy s said:


> My point also is it should be rules based just not what's in place. My sympathy certainly doesn't lie with the banks who now even though are posting huge tax free profits can still sow an idea of repossessions equaling lower svr rates. Public policy was an option at some stage



I think the key point you seem to be missing - or purposely ignoring - is that it is competition that would have the effect of downward pressure on SVRs. If a lender cannot enforce security efficiently and without massive cost then this needs to be priced into the interest rate charged to customers. Mortgage lending in Ireland is quasi-unsecured so until we create an environment whereby lenders can rely upon the security offered we’ll continue to have too few of them in the market, and consequently higher rates.


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## NoRegretsCoyote (7 Jul 2019)

24601 said:


> Mortgage lending in Ireland is quasi-unsecured so until we create an environment whereby lenders can rely upon the security offered we’ll continue to have too few of them in the market, and consequently higher rates.



Not only that, but Ireland is only so big a market, for any product.

Many British and European retail chains have come to Ireland since the 90s as there are enough consumers with spending power to make it worthwhile.

Sadly there will only every be so many new mortgages written in Ireland. There are big fixed costs associated with mortgage provision - underwriting, a branch network,regulatory, etc. That can only be spread across so many customers. It's similar for SME lending where there are basically only three players. New Zealand - a market pretty similar to Ireland - basically has four banks of any consequence and foreign banks aren't interested in market entry as its so small.

Even if collateral could be easily secured in Ireland, I don't think mortgage lending will ever be as cheap as euro-area levels.


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## 24601 (7 Jul 2019)

NoRegretsCoyote said:


> Not only that, but Ireland is only so big a market, for any product.
> 
> Many British and European retail chains have come to Ireland since the 90s as there are enough consumers with spending power to make it worthwhile.
> 
> ...



I just looked up NZ SVR rates.....Good God!


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## Sarenco (7 Jul 2019)

NoRegretsCoyote said:


> Even if collateral could be easily secured in Ireland, I don't think mortgage lending will ever be as cheap as euro-area levels.


The average rate charged on _all_ outstanding mortgages in Ireland (including low-margin trackers) is actually bang in line with the Eurozone average.

It's actually surprising that mortgage rates on _new _housing loans are not higher given our pro-defaulter policies.

Historic default experience feeds directly into the level of capital reserves banks are required to maintain in respect of new loans.  Our historic default rates are horrendous by any standard.


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## NoRegretsCoyote (7 Jul 2019)

Sarenco said:


> The average rate charged on _all_ outstanding mortgages in Ireland (including low-margin trackers) is actually bang in line with the Eurozone average.



My point was pretty clearly about new lending, where Irish rates are indeed higher.

In ten years much of the tracker book will be fully paid off. Even then I would not expect new lending rates to be at euro-area levels.


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## RedOnion (7 Jul 2019)

Whether a new lender is interested is all down to return on equity, with the amount of equity a bank lender must put up being driven by bad debts of which enforceability of security is a major factor.



NoRegretsCoyote said:


> There are big fixed costs associated with mortgage provision - underwriting, a branch network,regulatory, etc


There are very little fixed costs to start originating and servicing mortgages. A branch network is the very last thing that a new lender would think about setting up. Almost everything can be outsourced for a set percentage of the balances written / serviced. There are some fixed costs, but they aren't material.
In terms of market size, there are over 700k mortgages with an outstanding balance of just shy of 100bn. Just over 9bn of new lending was written last year, with 10bn expected this year. The market is big enough for a new lender if they saw the margins worthwhile for the risk they have to take on. Yes, it'd take a while to build up a worthwhile book size, but a new entrant gaining 20% share would be writing 2bn per year.



NoRegretsCoyote said:


> New Zealand - a market pretty similar to Ireland - basically has four banks of any consequence and foreign banks aren't interested in market entry as its so small


It might be a small market, but there are at least a dozen lenders offering mortgages in the main cities. I know one or two are subsidiaries of others, but there's a lot more competition there compared to here.


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## RedOnion (7 Jul 2019)

24601 said:


> I just looked up NZ SVR rates.....Good God!


Just remember they still have offset mortgages available.

And compare their fixed rate mortgages to their term deposit rates to give a better idea of bank margins. The NZD isn't anywhere near negative rates.


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## NoRegretsCoyote (7 Jul 2019)

RedOnion said:


> Whether a new lender is interested is all down to return on equity, with the amount of equity a bank lender must put up being driven by bad debts of which enforceability of security is a major factor.
> 
> 
> There are very little fixed costs to start originating and servicing mortgages. A branch network is the very last thing that a new lender would think about setting up. Almost everything can be outsourced for a set percentage of the balances written / serviced. There are some fixed costs, but they aren't material.



That's interesting. I had heard the opposite first hand from people in the industry.

So I'm curious. You say fixed costs are not material, and new entrants would have no need to cross-subsidise a tracker book. We know the market for new lending is growing, having more than doubled since 2012. So why have we not seen any new entrants?


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## RedOnion (7 Jul 2019)

NoRegretsCoyote said:


> I had heard the opposite first hand from people in the industry.


Well, the last time I set up a bank... What fixed costs are there? Dilosk and Finance Ireland are both able to turn a profit on very small portfolios.



NoRegretsCoyote said:


> So why have we not seen any new entrants?


Because of the amount of their own capital they need to put up, and the fact they can lend more elsewhere for the same capital.
All covered here:




__





						Department of Finance report on Risk Weighted Assets and mortgage rates
					

Some coverage on this topic, and why non-bank lenders might be able to undercut mortgage rates quicker than banks. I haven't fully read yet.  https://www.irishtimes.com/business/non-bank-mortgages-key-to-cutting-irish-interest-rates-study-finds-1.3820799?mode=amp...



					www.askaboutmoney.com
				




And here:




__





						Capital Adequacy rules will stop any foreign bank cutting mortgage rates in Ireland.
					

If the average rate across the eurozone is 1.8%, then they might see the Irish market as attractive but at the current rates.  There's been a lot of excitement over the last week about a new entrant to the Irish mortgage market, and speculation about what rates they might offer. I've seen...



					www.askaboutmoney.com
				




Maybe mortgage lending here just isn't profitable enough to attract new entrants?


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