General discussion of the issue (removed from public meeting thread)

Thanks Protocol, I was wondering how the Millars were able to take a case against Danske when they were essentially non existent in Ireland apart from those who got stuck with them once the NE kicked in.
 
Sarenco said:
Hi Bomb Voyage

I am in full agreement with your analysis that the policy response to date on mortgage arrears and repossessions has undermined competition in the mortgage market and has lead to an inappropriately high cost of credit in Ireland.

it seems to me that the SVR campaign should be calling on Government for a change in its policy approach and should be making specific proposals in this regard. Simply complaining about high SVR mortgage rates without making any specific proposals is surely an empty gesture.
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Hi Sarenco

Complaining about the issue could be very effective if directed at the right people I.e. Our elected representatives. We must encourage more complaining as staying silent on the issue is what will really harm our campaign.

I am not convinced that a change in government policy on how banks are required to deal with people in mortgage distress is what the SRV campaign should be calling for. I think the campaign should be simply calling for a cap on the interest rates that banks can impose on its customers - preferably by wielding its influence first with the threat of legislation if banks resist.

I believe that SRV mortgage holders have a just and legitimate claim to State protection given current market conditions.
 
Be careful what you wish for.

The World Bank has carried out extensive research on the use of interest-rate caps as a consumer protection measure (which is still a popular policy in Africa). It has concluded that the effects of such measures include the withdrawal of credit from the poor or from specific segments of the market and an increase in the total cost of credit through the introduction of additional fees and commissions.

In any event, I strongly suspect that the introduction of interest-rate caps would breach EU competition and/or banking law.

In the medium term the only way to bring down the cost of credit is competition. The introduction of interest-rate caps would be a further distortion of competition.
 
My house was riddled with Pyrite which forced me to remain with PTSB. I had the opportunity to lie to the solicitor when AIB where offering me a switch and foolishly I told the truth... Imagine if the banks had done that !!!
I make one mistake by taking on the Variable option and now I am punished without recourse.... how many mistakes have the banks made and got away with??
 
High SVR's should be nothing to do with the Central bank. It is not within their remit to instruct banks to reduce rates.
This would also apply to politicians. They may be in a position to "influence" those banks in which they have a majority share. However this would create a dangerous precedent as it could have repercussions on the return to profitability to those banks and eventual sale. I.e. benefitting the coffers of the country as a whole! Would it be accepted as reasonable for the Exchequer to cover the losses suffered by banks as a result of any such legislation? They have the option of looking at Cartel type practices given the closeness in pricing of the small number of banks and this would be at least a more democratic approach.
Once Government starts dictating to any business on pricing are we not creating a dangerous precedent?
 
The free competitive market should function without Government interference in normal circumstances. However this SVR mortgage market is not normal as a result of the economic crash and the subsequent Government intervention - they injected money in the banks but did not finish the job -ie they allowed their banks to select the SVR mortgage holders and saddle this group with excessive payments to cover tracker losses.
The family home of a SVR mortgage holder is as important as any other family home and should have some stability other than being gouged by Government banks to make their books look better.
Also this is urgent - as each month passes Banks take more high payments from families and get away with it.
It is incredible to hear today that Labour party politicians are considering giving a grant to help cover the 20% First Time Buyer deposit without doing anything for the other people that are paying for 10 Years+ with the high SVR rate and still owe more that the house is worth.
Why don't they give our family one of these grants to take us to 80% LTV and maybe we can look for a better rate then? Apartheid for sure.
I an all for meetings etc but it really looks like organised protests are needed ASAP.
 
el chapucero said:
The free competitive market should function without Government interference in normal circumstances. However this SVR mortgage market is not normal as a result of the economic crash and the subsequent Government intervention - they injected money in the banks but did not finish the job -ie they allowed their banks to select the SVR mortgage holders and saddle this group with excessive payments to cover tracker losses.
The family home of a SVR mortgage holder is as important as any other family home and should have some stability other than being gouged by Government banks to make their books look better.
Also this is urgent - as each month passes Banks take more high payments from families and get away with it.
It is incredible to hear today that Labour party politicians are considering giving a grant to help cover the 20% First Time Buyer deposit without doing anything for the other people that are paying for 10 Years+ with the high SVR rate and still owe more that the house is worth.
Why don't they give our family one of these grants to take us to 80% LTV and maybe we can look for a better rate then? Apartheid for sure.
I an all for meetings etc but it really looks like organised protests are needed ASAP.
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Again, our lenders are not losing money on performing tracker mortgages (will this myth ever die?). We have a detailed post here that sets out the figures.

No problem at all with organised protests but, again, what exactly do you want politicians or regulators to do? What specific action do you want them to take?

I'm not very keen on rain but I understand the futility of protesting about it.

The reported proposal to re-introduce the first time buyers' grant defies any rational explanation. Literally bordering on economic insanity.

I often wonder when our politicians will stop trying to bribe us with our own money? When we stop electing them I suppose.:confused:
 
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Sarenco said:
Be careful what you wish for.

The World Bank has carried out extensive research on the use of interest-rate caps as a consumer protection measure (which is still a popular policy in Africa). It has concluded that the effects of such measures include the withdrawal of credit from the poor or from specific segments of the market and an increase in the total cost of credit through the introduction of additional fees and commissions.
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Sounds alot like banking in Ireland as it is!
Sarenco said:
In any event, I strongly suspect that the introduction of interest-rate caps would breach EU competition and/or banking law.
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Interest rate caps are a measure of last resort to be introduced in the event that banks refuse to reduce their SVR. They are the stick the State can beat the banks with if necessary. And lets be clear, it is a stick that the State has at its disposal. Nothing in the EU Treaties should preclude the State from introducing interest rate caps provided they are applied equally to all banks operating in the State irrespective of nationality in particular.

Sarenco said:
In the medium term the only way to bring down the cost of credit is competition. The introduction of interest-rate caps would be a further distortion of competition.
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I disagree. Competition is certainly one way to bring down the cost of credit but it is not the only way nor is it the most realistic option given present conditions. It is preferable that State intervention in the market is kept to a minimum which is why pressure should be applied to the banks to reduce their rates of their own volition. If they resist, it is my personal view that SRV mortgage holders have a just and legitimate claim to insist that the State intervene and legislate for their protection given current market conditions.
 
Bomb Voyage said:
Sounds alot like banking in Ireland as it is!
Interest rate caps are a measure of last resort to be introduced in the event that banks refuse to reduce their SVR. They are the stick the State can beat the banks with if necessary. And lets be clear, it is a stick that the State has at its disposal. Nothing in the EU Treaties should preclude the State from introducing interest rate caps provided they are applied equally to all banks operating in the State irrespective of nationality in particular.

I disagree. Competition is certainly one way to bring down the cost of credit but it is not the only way nor is it the most realistic option given present conditions. It is preferable that State intervention in the market is kept to a minimum which is why pressure should be applied to the banks to reduce their rates of their own volition. If they resist, it is my personal view that SRV mortgage holders have a just and legitimate claim to insist that the State intervene and legislate for their protection given current market conditions.
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Hi Bomb Voyage

I actually don't disagree with the principle of capping excessive lending rates. In fact, we already cap the rates that moneylenders and credit unions can charge.

Whether or not the current SVR rates are excessive is obviously a matter of judgment. Our banks would point to their slim or non-existent profits in arguing that they are not excessive. Threatening to introduce rate caps if SVRs are not reduced on a voluntary basis will presumably only be effective if the threat is seen as being credible.

I also think that there would be legal/competition issues with capping rates in respect of existing loans that were perfectly legal at the time of origination, in contrast to capping rates that can be charged on new loans.

I certainly take the point that SVR mortgage holders, as a cohort, feel that their rates are disproportionatly high in comparison with other borrowers. However, from a broader societal perspective I think you would have to query whether it would be appropriate to cap such rates if the costs were largely passed on to low income customers (by way of increased charges) or increased the cost of credit for commercial purposes thereby having an adverse impact on employment, etc. Also I would suggest that the introduction of rate caps would have the effect of further disincentivising new entrants to the mortgage market which, in the long run, would leave all borrowers worse off.
 
Hi Brendan

Ciaran Hancock's article in The Irish Times provides interesting reading:

Hancock believes that your suggestion re. the Government legislating to control SVRs 'would be a regressive step and wouldn't be favoured by Honohan'.

Hancock refers to MEP, Brian Hayes' research as being 'unscientific' and questions why he has become so vocal now, when he remained silent on the issue when a TD.

'Hayes wonders why Belgian and German consumers get a rate of about 3% for a long term fixed product, while Irish customers have to pay 4.5%'.

Hancock further explains that 'half a dozen retail banks have quit the Irish market since the crash of late 2008' and are not returning, regardless of the upturn in the economy.

'The rub for the government intervening in the SVRs charged by banks is that even though it might play well with voters in an election year, it does little to encourage new competitors into the market. And it would hardly tempt investors to participate in capital raising plans of PTSB and AIB, which are key to taxpayers getting back the 23 billion bailout'.

Brendan - are you in any way concerned that 'your SVR campaign' could - if successful - be, at best, a pyrrhic victory and at worst a disaster?
 
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'Everybody' - really? Homeowners with trackers of properties in massive negative equity? The thousands of renters that are paying more in rent than SVRs are paying for their own asset? The hundreds of families with young children staying in emergency accommodation because the Government doesn't have the money to increase the rent supplement? The people on 10 year social housing waiting lists because the Government doesn't have the money to build social housing? The shareholders of PTSB and AIB? The citizens who believe that a viable banking sector is significantly more important? The citizens who want other retail banks to enter the Irish market to provide much needed competiton? The citizens who want the taxpayer to get the bailout money back and see the SVR campaign as a direct threat to that? The people on hospital waiting lists because the Gov doesn't have enough money?

The SVR campaign is just one of countless single issue campaigns that are screaming for attention.
 
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epicaricacy said:
'Everybody' - really? Homeowners with trackers of properties in massive negative equity? The thousands of renters that are paying more in rent than SVRs are paying for their own asset? The hundreds of families with young children staying in emergency accommodation because the Government doesn't have the money to increase the rent supplement? The people on 10 year social housing waiting lists because the Government doesn't have the money to build social housing? The shareholders of PTSB and AIB? The citizens who believe that a viable banking sector is significantly more important? The citizens who want other retail banks to enter the Irish market to provide much needed competiton? The citizens who want the taxpayer to get the bailout money back and see the SVR campaign as a direct threat to that? The people on hospital waiting lists because the Gov doesn't have enough money?

The SVR campaign is just one of countless single issue campaigns that are screaming for attention.
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Please read my post again ,

I didnt mention anything about homeowners with trackers,renters,young children or shareholders.

Again just to clarify,Its everybodys or should be everybody, that is on a SVR campaigning . Not Brendans Campaign
 
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