ESRI "People who don't have cancer more vulnerable than those who have cancer already"

Brendan Burgess said:

A 50 basis point rise leads to a 0.4 percentage point increase in the flows of new arrears for borrowers with tracker mortgages, compared to a 0.2 percentage point increase for those households with SVRs.

I don't know what the flow of new arrears is now for tracker mortgages. Let's say it's 1%. I very much doubt that an increase in the ECB rate of 0.5% would lead to it rising to 1.4%.

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This is almost certainly down to the demographics (size of outstanding balance, income of households) of tracker households compared to SVR households, and barely due to the first-round impact of higher rates per se.

Absolutely.

What will drive defaults is the loss of income.

Not whether tracker rates rise from 1% to 1.5%

Brendan

Take an example of Johnny who took out a €300k mortgage in 2006 over 30 years at ECB +1%.

The ECB rate was 3% so the mortgage rate was 4% .

Since then he has paid an awful lot less than he was expecting, so he has probably saved a lot of this.

His mortgage balance today is probably around €200k with 17 years to go at 1% mortgage rate, so his repayments are down to €1,066.

If the ECB raises the rate from 0% to 2%, which even the ESRI say is unlikely, his repayments will rise to €1,252

Summary



He has probably progressed in his career since then.

Conclusion: Tracker mortgage holders are not vulnerable.



Brendan

Brendan Burgess said:

If the ECB raises the rate from 0% to 2%, which even the ESRI say is unlikely, his repayments will rise to €1,252


Conclusion: Tracker mortgage holders are not vulnerable.

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Yes but your graph isn't at all complicated. LOL.

Hi Bronte

Are you suggesting that the ESRI report has more authority than my analysis because of this:

I have called on the ESRI to withdraw the report.

https://twitter.com/BrendanBurgess/status/1105509972316774401

Brendan Burgess said:

Hi Bronte

Are you suggesting that the ESRI report has more authority than my analysis because of this:

View attachment 3497

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Far be it from me to suggest that such reports are justification of one's jobs.

Or
Far be it from
me to suggest such reports are written in a way so that

- most ordinary people will not read them
- most will not understand them
- most will think it's highfluting stuff that's best left to the experts.

Would you happen to know what 'laggered level' of anything means.....

Bronte said:

'laggered level'

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I think a lagger is a Cork term for a drunk.

But what they actually refer to is the delay between interest rate rises and when people actually fall into arrears.

Brendan

Brendan Burgess said:

A 50 basis point rise leads to a 0.4 percentage point increase in the flows of new arrears for borrowers with tracker mortgages, compared to a 0.2 percentage point increase for those households with SVRs.

I don't know what the flow of new arrears is now for tracker mortgages. Let's say it's 1%. I very much doubt that an increase in the ECB rate of 0.5% would lead to it rising to 1.4%.

Those on tracker mortgages can comfortably handle an increase in the ECB rate.

Brendan

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Out of interest do you know the % of trackers who defaulted, since 2008,I know of tracker mortgages where the amount advanced even today are higher than they would get after setting off redress and compensation , are still higher than they amount the could borrow as of today,homes may be in positive equity but are just about making full repayments,

I see that they have corrected that Figure now.