# Ireland has always had higher mortgage rates than the rest of the eurozone



## Carrot/stick (9 Sep 2018)

Brendan Burgess said:


> It's a general indication of the amount people are overpaying on their mortgage.
> 
> For example, if you have a mortgage of €250k , you are paying around 1.5% more than the eurozone average, which is €3,750 or about €300 a year.
> 
> Brendan



Sorry for sticking my oar in again but in 2005 I had mortgage approval in France and Ireland. In France it was 25yrs fixed at 1.75% for the term. In Ireland it was 2.8% discounted svr for 1 year and 3.25% thereafter 25yrs as well. In Ireland though I didn't have access to all lenders I think. I went through a broker. In France I could only borrow about half of what I could in Ireland. I think we have always paid more than mainland Europe at least in my limited experience.


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## Brendan Burgess (10 Sep 2018)

Hi C/S

That is extraordinary. In 2005, the ECB rate was 2%. 

Not only were you able to borrow for less than that rate, but you were able to fix at that for 25 years. 

In Ireland trackers were issued from as little as 0.5% above ECB or 2.5%.  More generally, they were about 0.8% or 2.8%. 

Deposit rates were not much lower, so I have no idea how a French bank was able to lend to you at that rate. 

I would agree that, in general, Ireland and the UK, appear to pay higher prices for most things.  Not sure why.

But we had a period of tracker madness in Ireland where mortgages were issued at stupidly low prices.  That included the time when you took out a fixed rate mortgage at 1.75%.

If a French bank issues a fixed rate mortgage at 1.75% for 25 years, it would have been potentially a huge loss maker. 

If I understand it correctly, in France,  if you don't pay your mortgage, the lender does not have to go to court. They can just sell your house from under you.  I suspect that arrears are very low. 

By the way, do you know what the mortgage rate in France is now? 

Brendan


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## RedOnion (10 Sep 2018)

Are you sure about that rate of 1.75% in 2005?
That was well under the yield on French government bonds at the time.


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## Carrot/stick (10 Sep 2018)

RedOnion said:


> Are you sure about that rate of 1.75% in 2005?
> That was well under the yield on French government bonds at the time.


Yeah pretty sure, it was back in 2005. I had a friend who was working with an irish bank at the time and when i told him at the time he absolutely dismissed it as well saying it wasn't possible.


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## Carrot/stick (10 Sep 2018)

Brendan Burgess said:


> Hi C/S
> 
> That is extraordinary. In 2005, the ECB rate was 2%.
> 
> ...


I stopped working in France and settled in Ireland so I have no idea what the interest rates are now. 

I don't know how the default procedure worked in France, never heard of it happening while I was there but that could possibly have changed after 2008/9.


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## RedOnion (10 Sep 2018)

Was this as part of a sale & leaseback deal in France?

Data on historical interest rates on new lending is readily available on the French central bank website, and a rate of 1.75% makes no sense, given that monthly average rates on new lending never dropped below 3.48% in 2005.

I'm not saying it's impossible that a bank offered such loss making deals, but it definitely wasn't the norm if we're going to have a discussion about average rate differences across the EU.


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## Brendan Burgess (10 Sep 2018)

RedOnion said:


> Data on historical interest rates on new lending is readily available on the French central bank website, and a rate of 1.75% makes no sense, given that monthly average rates on new lending never dropped below 3.48% in 2005.



Hi Red

Which  would have made the average mortgage rate in France higher than the mortgage rate in Ireland in 2005 which is exactly what I would have expected. 

I do remember arguing with the banks, EBS in particular, that mortgage rates were too high in Ireland and that, as a mutual, they could reduce them.  I am not good with dates, but that was probably around 2000.  They denied it and said that the higher rates were needed to fund growth.   But then when BoSI came into the market , they all cut their rates. 

So Nick's point is probably true up to around 2003 but it's not true for the period 2003 to 2009/10 when they started raising mortgage rates again as the competition pulled out.

I can't explain how Nick got such a good deal from the French in 2005. It makes no sense.  I could understand a fixed rate of 1.75% as a teaser for a year or two, but not for 25 years. 

Nick - I know you said fixed rate - you didn't mean fixed margin by any chance? ECB +1.75% would have been about right.

Brendan


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## RedOnion (10 Sep 2018)

The thread was started from a post with a specific example, which doesn't make sense. It's the only example yet in the thread.

Keeping specifically with mortgages, if we're talking more generally, there is no doubt that prior to 2003 mortgage rates here were ridiculously expensive. That's why BOSI and other foreign lenders got into the market, and they brought margins down quickly.

I think by late 2005 we were fairly in line with Eurozone averages. Any anomalies can to a large extent be explained by the availablity of government funding, or arrangement fees.

Just saying it's always been higher, without any backup ) analysis doesn't make it a fact.


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## Carrot/stick (10 Sep 2018)

Brendan Burgess said:


> Hi Red
> 
> Which  would have made the average mortgage rate in France higher than the mortgage rate in Ireland in 2005 which is exactly what I would have expected.
> 
> ...



Yeah sorry I must have misunderstood that at the time and it must have been + 1.75% ecb rate at the time. Again I'm no financial guru/savvy property investor. I didn't go ahead with a purchase at the time but given what you said there I must have misunderstood at the time. Again I'm absolutely no financial guru(more like financial neanderthal). I aplogise for any confusion caused.


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## Brendan Burgess (10 Sep 2018)

NickNasty said:


> The fact of the matter is that the Irish consumer (and business person) have always paid way in excess of the Eurozone average for credit; end of.



Hi Nick

Repeating this without any back up is not helpful. 

Without any backup it's just a hunch on your part. End of...

Brendan


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## RedOnion (10 Sep 2018)

NickNasty said:


> save tracker mortgages


So now you're changing the parameters of debate I see! This discussion is about mortgage rates.

Please decide what your hypothesis is, and we can discuss that, so long as you provide evidence.


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