How dare PTSB tell us to mind our own business

well, youre going off topic on the thread here - nt sure if BB will allow it ;)
but ideally we need a lot more regulation than currently exists.
I would certainly want to have enough in place so that this type of scenario cannot happen again,
i,e, that the boss of a major bank can raise his SVR rate as high as he likes, and there is no control in place on that, placing real people and real home owners into distress and then simply say "please dont interfere with my running of my business"

so, for a start. the big one. three times multiple of salary. lets get back to that
i think one that links to salary, rather than just LTV, is really important. LTV based ones tend to encourage young people to borrow from parents, who need to keep their savings for care when their old, etc, so it creates all sorts of pressures...
i know that salary based one wont fix everything now, but it will take care of the future...

then maybe a cap on the difference between our average SVR and euro average SVR? thats just a suggestion.
people need to sit around and discuss this more.

but for now the important thing is that people in his position acknowledge who has been funding them and bailing them out continuously
over the past years, and until the correct controls are in place, he not only engages with government, but is obliged to take their views into account
while he "runs his business".
 
Well in addition to the loan to value (LTV) restrictions, the Central Bank also introduced loan to income (LTI) restrictions whereby no more than 3.5 times an applicants income may be advanced as a home loan. Banks are obviously free to offer less than this amount and will frequently do so, particularly where an applicant has significant childcare costs.

I agree with you that we should introduce a statutory cap on the mortgage rate than can be charged by a lender as a protection for those borrowers that are not in a position to refinance their loans. A mortgage rate cap has existed in France since 1966 whereby mortgage rates are capped at 133% of the average effective mortgage rate in the previous quarter. In the third quarter of 2013 the average effective variable mortgage rate in France was 3.4% and therefore the maximum variable rate that could be applied in the fourth quarter of 2014 was 4.53%.

The UK is the only other EU member state where SVRs are commonplace (the average SVR in the UK is currently 4.51% - marginally higher than the average SVR in Ireland). As such, a "euro average SVR" would be meaningless.

The median interest rate on all outstanding mortgages in Ireland is currently 2.8%, which is close to the median rate across Europe.

It is certainly true that new home loans (either to acquire a property or to refinance an existing home loan) are significantly lower in other European countries. This is primarily because our default rate is significantly higher than the default rate in all other EU member states (with the exception of Greece). As such, Irish banks have to set aside considerably more capital to provide for these higher anticipated defaults (the regulatory capital requirements are actually common across the EU) and therefore have to charge higher interest rates to borrowers to cover these additional costs.
 
Sarenco said:
Well in addition to the loan to value (LTV) restrictions, the Central Bank also introduced loan to income (LTI) restrictions whereby no more than 3.5 times an applicants income may be advanced as a home loan. Banks are obviously free to offer less than this amount and will frequently do so, particularly where an applicant has significant childcare costs.

I agree with you that we should introduce a statutory cap on the mortgage rate than can be charged by a lender as a protection for those borrowers that are not in a position to refinance their loans. A mortgage rate cap has existed in France since 1966 whereby mortgage rates are capped at 133% of the average effective mortgage rate in the previous quarter. In the third quarter of 2013 the average effective variable mortgage rate in France was 3.4% and therefore the maximum variable rate that could be applied in the fourth quarter of 2014 was 4.53%.

The UK is the only other EU member state where SVRs are commonplace (the average SVR in the UK is currently 4.51% - marginally higher than the average SVR in Ireland). As such, a "euro average SVR" would be meaningless.

The median interest rate on all outstanding mortgages in Ireland is currently 2.8%, which is close to the median rate across Europe.

It is certainly true that new home loans (either to acquire a property or to refinance an existing home loan) are significantly lower in other European countries. This is primarily because our default rate is significantly higher than the default rate in all other EU member states (with the exception of Greece). As such, Irish banks have to set aside considerably more capital to provide for these higher anticipated defaults (the regulatory capital requirements are actually common across the EU) and therefore have to charge higher interest rates to borrowers to cover these additional costs.
Click to expand...

ok. so youve a background in banking there and youre picking me up on some techinical terms. thats ok, but my poiint remains 100% valid.
so only UK has a "SVR", So then please insert the appropriate tech term when i say lets cap our SVR at X% vs the euro "SVR"
we need regulation so that our SVR rate is acceptably low w.r.t. equivalently available rates in the eurozone (whatever they are called - it actually doesnt matter).

So why does this forum exist. why do you post here? the purpose is to reduce the SVR becuase its currently much higher than eurozone average.
at least thats what it says up top. but now all of your points are implying we fare quite closely with euro equivalents (uk, france etc)

you say the median rate in ireland is 2.8% which is close to rate across europe. Come on man! that includes tracker rates. so that just proves how high our SVR is...
the median rate as a value in the irish context is utterly meaningless because of the huge disparity between the trackers and the SVRs.
the simple fact you wrote that means you are implying all is OK here in Ireland...
So that leads again to the question. why do you post here??!! Oh yes, I remember now, You are disgusted with the government and their socialist "meddling"
yes why cant they just fork out those bilolions and then shut the hell up... I mean what do they know about business anyway right?!.
Heres hoping you get to read this post before its deleted. !
 
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I've no background in banking as it happens but I am certainly interested in the area.

I've already pointed out that the median interest rate charged on all outstanding variable rate mortgages in Ireland is pretty much in line with the European median. That means that half of all outstanding variable rate mortgages in Europe are charged more than half of all outstanding rate mortgages in Ireland.

Yes of course the median European interest rate includes trackers - in Ireland and elsewhere - what's your point? Do you suggest that we simply rip up these contracts?

Irish banks simply cannot offer new home loans at the same rate as their European counterparts. If they did they would rapidly become insolvent and would require further taxpayer funds (because nobody else would capitalise the banks in these circumstances). I don't know about you but I have zero interest in any more of my taxes being directed towards our banks.

I post here on a regular basis in the hopes of learning something. Why have you posted?

You certainly give the impression that you are really just interested in letting off steam. Nothing wrong with that, of course, but I was hoping that you might be interested in offering a constructive suggestion.

Again, I don't agree with political interference in businesses that are carried out in accordance with any applicable regulations. If you have a problem with our current regulations then suggest a change.

I'm really not sure that there is much point in continuing with this exchange but I wish you the best of luck.
 
ok.

you want a constructive suggestion, well i have been putting this one forward all along during our exchange!
I suggest that a regulation is put in place to limit the disparity between our SVR rate here (currently ~4.5%) and the euro average rate (currently 2.5%) .
In fact this reduction is the goal of this entire forum.. so how about we regulate it formally?

i do find it a bit patronizing that because I have no time for the arrogance of bailed out banking executives, that this is considered "letting off steam".
I think its a little more important that that.

i agree though. we probably are flogging the horse dead here - i wish you the best as well..
 
As a constructive suggestion --- would it not be possible for the banks to agree a substantial cut in SVR in return for the introduction by Government of a simple quick legal route to repossessions? It appears that countries with such a system have the lowest rates.
Risk is a big player in SVRs at present.
 
Ok, I'll give it one more shot.

No bank would lend money in Ireland at this rate today given our default rates and the difficulty of enforcing security. Would you lend somebody money at a 2.5% interest rate if there was a 10% chance that they wouldn't pay you back?

Even if you would lend at this rate, would you have enough capital set aside to absorb the anticipated losses? Our banks certainly don't so where will the additional money come from? No rational private investor would advance the necessary capital in these circumstances so where will the money come from where exactly?

If the banks can't lend money profitably to people to buy houses, who will build the houses that we need to accommodate people?

For the avoidance of any doubt, I am fully supportive of any realistic initiative or proposal that reduces or helps reduce variable mortgage interest rates.
 
rayn said:
As a constructive suggestion --- would it not be possible for the banks to agree a substantial cut in SVR in return for the introduction by Government of a simple quick legal route to repossessions? It appears that countries with such a system have the lowest rates.
Risk is a big player in SVRs at present.
Click to expand...


I have been trying to establish why it takes so long to repossess in Ireland.

Part of the reason had to be reluctance to pursue repossession due to the Dunne judgment, which caused a backlog of repossessions.

However, since the introduction of the Land and Conveyancing Law Reform Act 2013 this should no longer be an issue.

Our system seems to be very similar to the UK, which seems to achieve repossession in a much shorter period.

So what exactly is the problem in Ireland?
 
Seems I have been picked up all wrong. I do not think our situation is all the fault of the government. I am certainly not a "Bank Defender". I despise them. I am completely in favour of bank regulation.

What I'm against is the government pretending that the banks have been rehabilitated as businesses, and then poking their nose into setting their terms of business. All they will achieve is annoying share holders and scaring off potential buyers. If they want lower rates they need to foster competition, not dictate terms. Alternatively nationalise some of the banks if you want to dictate terms.

Most importantly, I don't believe for one second that Noonan's interference has actually caused SVRs to be lowered. I think the banks were going to do that anyway. The fact that they are offering lower fixed rates means that they think rates are going to fall over the next while. Noonan has just hopped on the populist bandwagon for a bit of cheap publicity. He knows the public will applaud him for sticking one to the banks. The problem is, he's done no such thing.
 
In keeping with the OP,

During a conversation with somebody at Danske this week, it was at one point suggested that i, 'should be greatful that Danske havnt asked for their money back'...

I was simply asking what the timeline was for Danske exiting Ireland and what the implications and outcome might be for their 'customers'...

I then spoke to the Central Bank asking why Danske are not included in the 6 banks 'engaging' with Mr Noonan and what regulation was planned for Danske and their mysteriously non existent timeline for their publicised 'pulling out of Ireland' plans.

It was suggested that we email enquiries@centralbank.ie to help them gauge the scale and sentiment towards Danske.

Might be worth copying Central Bank on any emails being sent to TD's etc as extra coverage of our situations...
 
Sarenco said:
Ok, I'll give it one more shot.

No bank would lend money in Ireland at this rate today given our default rates and the difficulty of enforcing security. Would you lend somebody money at a 2.5% interest rate if there was a 10% chance that they wouldn't pay you back?

Even if you would lend at this rate, would you have enough capital set aside to absorb the anticipated losses? Our banks certainly don't so where will the additional money come from? No rational private investor would advance the necessary capital in these circumstances so where will the money come from where exactly?

If the banks can't lend money profitably to people to buy houses, who will build the houses that we need to accommodate people?

For the avoidance of any doubt, I am fully supportive of any realistic initiative or proposal that reduces or helps reduce variable mortgage interest rates.
Click to expand...

Hi Sarenco,

here we go again, ! but sorry I disagree with your statistic there. I know you have good statistical and technical knowledge of the way it works, which is important.
but sometimes I think you use them a little unfairly to make a point

your value of "why loan at 2.5% if there is a 10% chance they wont pay you back". Im sure that figure of 10% is based on current stats for lending in ireland vs. problem payments/arrears? or some sensible statistic of that nature?

but lets take the reducing of SVR to 2.5%, for the two different categories where we would like to see it :
1. loaning at 2.5% to new business. New business will be subject to the more rigorous LTV and LTI controls that are now in place so much less likely to default there than the 10% stat which youve taken there

2. loaning to existing business at 2.5%. So people like myself who are on 4.5% and would come down to 2.5%. Weve been struggling along at 4.5%, at great pain, but just about managing.
So obviously we are not going to now default at the lower rate (in fact we might if it stays at the higher for much longer!).

So where does this 10% come from? It doesnt really apply to the loans that will be generated at that rate.
 
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Domhnall O'Sullivan said:
Hi Sarenco,

here we go again, ! but sorry I disagree with your statistic there. I know you have good statistical and technical knowledge of the way it works, which is important.
but sometimes I think you use them a little unfairly to make a point

your value of "why loan at 2.5% if there is a 10% chance they wont pay you back". Im sure that figure of 10% is based on current stats for lending in ireland vs. problem payments/arrears? or some sensible statistic of that nature?

but lets take the reducing of SVR to 2.5%, for the two different categories where we would like to see it :
1. loaning at 2.5% to new business. New business will be subject to the more rigorous LTV and LTI controls that are now in place so much less likely to default there than the 10% stat which youve taken there

2. loaning to existing business at 2.5%. So people like myself who are on 4.5% and would come down to 2.5%. Weve been struggling along at 4.5%, at great pain, but just about managing.
So obviously we are not going to now default at the lower rate (in fact we might if it stays at the higher for much longer!).

So where does this 10% come from? It doesnt really apply to the loans that will be generated at that rate.
Click to expand...

Well, approximately 10% of all PDH loan accounts are in arrears of 90 days or more (the percentage, by value, of all outstanding mortgages that are 90 days or more in arrears is over 15%). But the point I was really trying to make is that lenders have to price default risk into the rates they offer. The risk of default is high in Ireland and therefore the cost of credit is high.

This default risk is reflected in the regulatory capital that banks are required to maintain to absorb unforeseen losses and the cost of that capital. You are absolutely correct that the default risks associated with new loans may differ from existing loans but banks do not have sufficient information at this stage to fully understand if this will prove to be the case and adjust their capital ratios accordingly.

Trust me, I would love to see variable rates on new loans fall to levels that are comparable with our continental neighbours but this will take a long time given the scale of the losses suffered by our banks on defaulting loans.

If you are interested in this issue, I am attaching a link to the Central Bank's recently published report on SVR pricing which gives a useful high-level summary of the various factors that are relevant to the pricing of loans.

http://www.finance.gov.ie/sites/default/files/Influences on SVR Pricing in Ireland.pdf
 
dub_nerd said:
Seems I have been picked up all wrong. I do not think our situation is all the fault of the government. I am certainly not a "Bank Defender". I despise them. I am completely in favour of bank regulation.

What I'm against is the government pretending that the banks have been rehabilitated as businesses, and then poking their nose into setting their terms of business. All they will achieve is annoying share holders and scaring off potential buyers. If they want lower rates they need to foster competition, not dictate terms. Alternatively nationalise some of the banks if you want to dictate terms.

Most importantly, I don't believe for one second that Noonan's interference has actually caused SVRs to be lowered. I think the banks were going to do that anyway. The fact that they are offering lower fixed rates means that they think rates are going to fall over the next while. Noonan has just hopped on the populist bandwagon for a bit of cheap publicity. He knows the public will applaud him for sticking one to the banks. The problem is, he's done no such thing.
Click to expand...

I'm not sure that I would share your optimism that average SVRs will reduce to any material extent.

I suspect we will actually reflect the recent experience in the UK where SVRs stay at relatively high levels but new lending rates at low LTVs/LTIs (both fixed and variable rates) will continue to fall. I don't see anything in the Minister's press release (or the subsequent comments on behalf of certain banks) that would lead me to believe otherwise.
 
Eureka101 said:
In keeping with the OP,

During a conversation with somebody at Danske this week, it was at one point suggested that i, 'should be greatful that Danske havnt asked for their money back'...

I was simply asking what the timeline was for Danske exiting Ireland and what the implications and outcome might be for their 'customers'...

I then spoke to the Central Bank asking why Danske are not included in the 6 banks 'engaging' with Mr Noonan and what regulation was planned for Danske and their mysteriously non existent timeline for their publicised 'pulling out of Ireland' plans.

It was suggested that we email enquiries@centralbank.ie to help them gauge the scale and sentiment towards Danske.

Might be worth copying Central Bank on any emails being sent to TD's etc as extra coverage of our situations...
Click to expand...

Danske operate in Ireland as a branch of the Danish bank. They are not authorised or supervised by the Central Bank (other than in respect of conduct of business rules) and obviously received no capital from the Irish taxpayer.
 
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