Key Post Central Bank continues to mislead SVR mortgage holders about true rates

[44brendan]

Ok accepted that the tenet of the post is related to CB reporting. However the broader impact of the rate anomoly between Irl & other countries within the Eurozone is that Irish SVR mortgage clients are paying considerably more for the same financial product than our European neighbours. Who can address this?
Well obviously the Banks can compete on rate to increase their mortgage book. However, there appears to be no major incentive to compete on rate. External banks who previously drove margins down have exited the market and there is no sign of any new players entering this market at present. You could say that this is a "cartel". I.e. Tacit agreement amongst the banks to retain high rates. Its' a profitable business for all and it would be interesting to see whether a bank such as KBC would create a "first mover advantage" by competing for new business on rate.

 

[keepon]

if it's so obviously a cartel, is it legal?

 

[dub_nerd]

To be a cartel requires explicit agreement, not tacit agreement. The banks are just working within prevailing market constraints. They don't have to conspire with their competitors to know that those competitors are suffering the same sort of losses as themselves, and need to keep margins high. This is the consequence of our governments declaration that the banks were "of systemic importance". If you know you are of systemic importance, you don't have to worry about minor niggles like competition. At the moment the banks also don't have to fear any foreign competition stepping in to eat their lunch.